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NON-PERFORMING Loans (NPLs) in the banking industry have deteriorated the asset quality after increasing by 29.7 percent during the first quarter of this year.

Bankers Association of Zambia (BAZ) public relations officer, Miriam Zimba, explained that during the first quarter of this year, the gross NPLs increased by 29.7 percent to K3, 102.8 million compared to K2, 392.1 million at end March 2017.

Ms Zimba said the sector`s asset quality had been deteriorating owing to the high level of NPLs in the industry.

“As at end March 2018, the Non-Performing Loans were recorded at K3, 102.8 million and the Non -Performing Loans to gross loans ratio stood at 13.0 percent across the industry, which is well above the prudential threshold of 10 percent,” she said.

She said this in a response to a press query from Daily Nation.

Ms Zimba said the main challenge remained with the risk of NPLs with the ratio that was above the prudential threshold.

She, however, said that the commercial banking sector would continue to support the growth sectors of the economy.

“Given that the macroeconomic fundamentals have continued to stabilise, we anticipate that the exchange rate of the Zambian Kwacha will remain stable and the nominal lending rates will be maintained in line with the Monetary Policy Rate interventions,” Ms Zimba said.

Recently, BAZ observed that the level of NPLs for the banking industry had currently increased beyond normal threshold of 10 percent, thereby holding on effect on the efforts to reduce interest rates.

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