Gambiaj.com – (BANJUL, The Gambia) – According to the Monetary Policy Committee (MPC) of the Central Bank, trade activity volumes in The Gambia’s interbank dalasi market from January to April 2024 totaled D4.9 billion, a significant decrease compared to the D7.4 billion recorded in the same period in 2023. The weighted average interest rate in the market also declined, falling from 7.4 percent in April 2023 to 4.9 percent in April 2024, following trends in the three-month Treasury bills rate.
Despite these decreases, the banking industry’s performance remains robust, supported by healthy macroprudential ratios. The asset base of the industry grew from 70.7 percent of GDP in March 2023 to 76.9 percent in March 2024. Total customer deposits, the main funding source for banks, increased by 11.1 percent year-on-year, reaching D58.9 billion as of March 2024.
Furthermore, the industry remains well-capitalized and solvent. The capital and reserves of banks increased by 30.9 percent, standing at D10.6 billion, bolstered by a 19.4 percent rise in retained earnings from the previous year. The aggregate risk-weighted capital adequacy ratio of banks was at 27.9 percent in March 2024, well above the minimum regulatory requirement of 10 percent.
The banking industry continues to be liquid and profitable, with a system-wide liquidity ratio of 78.3 percent in March 2024, up from 70.9 percent in March 2023. However, non-performing loans increased to 8.7 percent in the reporting quarter from 3.3 percent in December 2023. Despite credit concentration risks, stress test results indicated low overall market risk, highlighting the industry’s resilience.
On the monetary front, annual money supply grew by 11.2 percent in March 2024, up from 9.3 percent in December 2023. Growth in annual reserve money moderated to 8.5 percent, down from 14.1 percent in December 2023. Credit supply to the private sector also increased, growing by 19.3 percent in March 2024, although this was lower than the 27.6 percent growth recorded in March 2023, reflecting tighter monetary and financial conditions.
Headline inflation decelerated for the third consecutive month, driven by moderated global commodity prices and domestic policy actions. In April 2024, headline inflation declined to 11.0 percent, down from 14.9 percent in March 2024 and the peak of 18.5 percent in September 2023. The decline was broad-based, affecting both food and non-food inflation. If there are no sudden surprises in global commodity prices, inflation is expected to decelerate to single digits by the end of 2024.
Food inflation decreased to 15.6 percent in April 2024 from 21.0 percent in December 2023, driven by significant deceleration in the prices of bread and cereals, and meat, while prices of vegetables and dairy products remained stable. Similarly, non-food inflation declined to 5.4 percent from 8.7 percent in March 2024, owing to decreased prices of textiles and energy.
The central bank’s core measure of inflation, which excludes volatile energy and food products, also declined significantly during the review period, indicating that underlying inflationary pressures are abating.
The Gambia’s banking industry continues to demonstrate resilience and stability amidst fluctuating market conditions, showcasing strong performance and robust financial health.
