Freetown, SIERRA LEONE – Financial Services Associations (FSAs) demonstrated a commendable performance in 2022, achieving increased profitability and successfully reducing non-performing loans (NPLs), according to data from the Bank of Sierra Leone (BSL).
The aggregate results indicated a positive trend, with total assets of FSAs rising by NLe8.1 million to reach NLe92.2 million in 2022. Additionally, share capital experienced a boost, increasing by NLe1.3 million to NLe27.9 million.
Despite a modest 3.4 percent increase (NLe2.1 million) in the loan portfolio, which reached NLe64.67 million, the number of active loan clients witnessed a decline of 11 percent, totalling 34,321.
In its analysis of FSAs’ performance, the Bank reported a growth in total income to NLe15.4 million, primarily driven by increased interest income. However, this positive trend faced challenges from financial expenses and personnel/administrative expenses. Nevertheless, the overall profits managed a slight increase.
The consolidated Return on Assets (ROA) for FSAs was reported at 7.1 per cent, marking a noteworthy 1.4 percentage points improvement from 2021 and surpassing the Microfinance Information Exchange (MIX) standard of a minimum of 2.1 per cent.
While the consolidated Return on Equity (ROE) experienced a minor decrease by 0.8 percentage points to 17 per cent, it still comfortably met the MIX requirement of a minimum of 13.6 per cent.
Although FSAs, on aggregate, did not meet the MIX standard of a maximum 4.8 per cent NPL ratio, there was a significant reduction by 5 per cent, reaching 11.0 per cent. This reduction indicates positive strides in asset quality management and reflects the industry’s commitment to improving financial stability.
The financial sector anticipates continued efforts from FSAs to sustain this positive trajectory, ensuring a robust and resilient financial environment in Sierra Leone. ZIJ/28/12/2023