• Gabon banks’ liquidity up 47%, deposits drive Q1 2025 growth

• Credit drops 13%, private sector loans fall despite cash surplus

• Non-performing loans rise 16%, hit 10.9% of total credit

The Gabonese banking system saw a significant improvement in liquidity during the first quarter of 2025, according to a recent report from the Ministry of Economy and Finance. The total balance sheet for the banking system increased by 7.8% from the previous quarter, and its cash surplus jumped 47.3% quarterly and 35.3% year-on-year.

This improvement was driven by a strong rise in deposits, particularly demand deposits, which grew by 6.6% despite a 7% decline in term deposits. Private sector deposits, which make up nearly three-quarters of banking resources, grew slightly by 1.5%, while public sector deposits surged 17.3% over the quarter.

Despite this increased liquidity and strong balance sheets, credit distribution slowed. Gross credit dropped by 13%. More concerning, loans to the private sector, the primary driver of the economy and 90.9% of total credit, fell by 1.7% for the quarter. At the same time, financing for public enterprises plunged 48.9%, and loans to non-residents dropped 1.6%. Only leasing saw notable growth, rising 56.2%.

The report attributes this slowdown to "difficulties encountered by the banking sector in mobilizing resources," an explanation that appears paradoxical given the increase in deposits and cash surplus.

This credit contraction may be a consequence of deteriorating asset quality. Non-performing loans continued to rise, increasing 4.8% for the quarter and 16.1% year-on-year, to represent 10.9% of total credit. This rise indicates a "degradation of the apparent portfolio quality," which could make banks more cautious about issuing new loans.

The credit slowdown occurred while the Bank of Central African States (BEAC) was still pursuing a restrictive monetary policy. However, a turning point came in March 2025, when the bank decided to lower its key interest rate to support economic recovery and improve financing conditions for economic agents in the CEMAC zone. This shift could create the conditions for a rebound in private sector lending in the coming quarters.

Sandrine Gaingne