Tunisian Banking Sector: Resilience and Challenges Ahead
In its 2024 Research Review, Tunisie Valeurs dedicates research notes to the banking and insurance sectors. In this article, we will explore the specificities of the Tunisian banking market.
2023: A Year of Resilience
In 2023, the listed banking sector demonstrated remarkable resilience in a challenging economic environment, supported by a solid collection dynamic and good cost control despite monetary tightening. Although low credit demand slowed down production, it contributed to strengthening liquidity and improving the Credit/Deposit ratio. However, the growth of net banking product (PNB) slowed down, productivity suffered from the inflationary context, and portfolio quality deteriorated with an increase in classified claims. Despite these challenges, net profitability was maintained thanks to a stable risk cost and a decrease in collective provisions, allowing the sector to recover its pre-pandemic profit levels.
2024: A Complex Year Ahead
The year 2024 is expected to be complex, with a slight acceleration of collection, but credit growth remaining anemic due to sluggish investment and a stricter regulatory framework. Productivity deterioration is expected to continue, although the easing of risk costs provides some respite. Furthermore, the new Law 41-2024 on checks without provision could increase regulatory pressure from 2025, while profit growth prospects for 2024 remain limited.
Positive Stock Performance in 2023
Despite these challenges, the sector experienced a positive stock performance in 2023, with a 11.7% increase in the banking index, driven by attractive valuations and generous dividends. However, risks related to credit tightening and potential profit contraction may encourage investors to adopt a more cautious approach, favoring increased selectivity and considering profit-taking in the coming months.
