Highlights of our analysis:

1. Strong trend growth – Aggregate commercial banking assets grew at a compound annual growth rate (CAGR) of 11% during the period 2018-2024;
2. Significant concentration of banking assets, liabilities and profits among a few banks. The top five banks controlled 55% and 66% of banking assets and profits, respectively;
3. Ample scope for growth in private sector credit. Banks maintained high levels of liquidity during 2024. Cash and cash equivalents and investment in trading securities comprised 39% of the bank’s assets as at 31 December 2024.
4. Muted return on average equity with the highest being 23%. This is attributable to high cost-income ratios and the fact that most banks were over-capitalised
5. A number banks have elevated risk of non-performing loans: 11 banks had non-performing loans in excess of 10% of total equity.
6. The banking industry faces a number of potentially disruptive trends in the medium-term, including the impact of fintech and non-bank innovation, lower yields on government securities and high operating costs.

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