The Central Bank of Eswatini published its June 2025 Annual Financial Stability Review, reporting a modest easing in systemic risk over the past year as the Aggregated Financial Stability Index fell to 0.32 from 0.35. The Review nonetheless flags persistent vulnerabilities, including fiscal imbalances, elevated household and corporate leverage, and weakening bank profitability, with projections to June 2026 pointing to a gradual rise in systemic pressures if these issues are not addressed. Domestically, the Bank notes a cumulative 75 basis point reduction in the discount rate to 6.75 percent over the year to June 2025 and a decline in inflation to 2.9 percent from 4.4 percent. Fiscal pressures persisted, including a projected deficit of 3 percent of GDP and public debt rising to 40.3 percent of GDP. The banking sector remained well capitalised (aggregate capital adequacy ratio 16.9 percent) but profitability fell (net profit after tax down to SZL 495.7 million, return on assets 1.6 percent, return on equity 11.5 percent) and the non-performing loan ratio edged up to 7.0 percent (SZL 1.3 billion), alongside elevated borrower and depositor concentration. Pension assets grew 11.4 percent to SZL 55.8 billion (57.1 percent of GDP), while payment and digital channels expanded, including SWIPSS processing 63,495 transactions valued at SZL 338.3 billion and mobile money transaction volumes rising to 12.9 million, against a backdrop of reported cybercrime losses of over SZL 8.5 million between September 2024 and September 2025. On policy development, the Review highlights legislative reviews intended to provide explicit authority for a broader set of macroprudential tools, progress toward establishing a Deposit Protection Fund, and the formal establishment of a resolution function. It also reports ongoing development of macroprudential surveillance capabilities, including stress-testing and an early warning system, and notes that the pace of change may require moving the publication to a biannual cycle in the future.
Central Bank of Eswatini 2025-12-08
Central Bank of Eswatini financial stability review reports slightly lower systemic risk and progresses deposit protection and resolution work
The Central Bank of Eswatini's June 2025 Annual Financial Stability Review shows a modest reduction in systemic risk, with the Aggregated Financial Stability Index at 0.32. However, vulnerabilities like fiscal imbalances and weakening bank profitability persist, with projections of rising systemic pressures if unaddressed. The Review also highlights legislative reviews for macroprudential tools, progress on a Deposit Protection Fund, and enhancements in macroprudential surveillance.