Tunisian Banks Continue to Evolve in a Complex Environment
Tunisian banks are continuing to operate in a complex environment, marked by high inflation, sluggish economic growth, and high interest rates, according to the American rating agency Fitch Ratings.
Limited Credit Growth
According to Fitch, credit growth, limited to 0.6% in the first five months of 2025, reflects both moderate financing demand and strong absorption of resources by the state, reducing access to credit for other economic sectors.
Upgrade of Tunisia's Sovereign Rating
In September 2025, Fitch upgraded Tunisia's sovereign rating to 'B-' with a stable outlook. However, this improvement is not expected to translate into a significant improvement in the operating conditions of banks, despite an upward revision of the operating environment rating.
High Non-Performing Loans (NPL) Ratio
The NPL ratio of the sector reached 14.7% at the end of March 2025, its highest level in four years (compared to 13.1% at the end of 2021). A significant portion of these loans corresponds to legacy assets from previous periods, suggesting potential for a reduction in the NPL ratio in the medium and long term.
Modest Profitability
The sector's profitability remains modest, with an average return on equity (ROE) of 10.6% over the period 2022-T1 2025. In the first half of 2025, the cumulative net result of the top 10 banks increased by 13% year-over-year, but this performance was offset by a 21% increase in risk costs and an 8% increase in operating expenses.
Satisfactory Liquidity Conditions
Liquidity conditions remain satisfactory and are expected to be maintained in 2026. Customer deposits, the primary source of funding for banks, increased by 3% in the first five months of 2025 (compared to 10% in 2024), while credit outstandings only increased by 0.6%. Refinancing from the Central Bank of Tunisia (BCT) accounted for 5% of the sector's liabilities at the end of May 2025.
Favorable Liquidity Conditions to Support Increased Exposure to Sovereign Debt
Fitch anticipates that these favorable liquidity conditions will allow for a gradual increase in banks' exposure to sovereign debt in 2026, supported by weak private credit demand and attractive risk-adjusted returns on public securities.
