In 2022, the banking sector continued to show "resilience" despite the economic challenges has been facing, hence, consolidating its solvency ratios with an average Tier 1 of 10.8% and an overall ratio average of 14%, the Central Bank of Tunisia (BCT) said on Friday. The sector also maintained a liquidity position at «satisfactory levels», managed to maintain the share of classified debts at around 13% and improve its profitability indicators, the BCT added in its 12th Annual Report on the Banking Supervision for the 2022 Financial Year. This resilience can be explained by the «proactive prudential» measures taken in recent years, the BCT underlines, which takes stock of the activity and the financial situation of banks and financial institutions in a «difficult and uncertain» economic context. Yet despite this resilience, the BCT underlined that the sources of vulnerability weighing on the stability of the financial sector have increased in 2023. This resulted in growing tensions related to the country' s economic context, the tightening of monetary policy as well as the increase in the exposure of banks to the public sector. These pressures have been observed in the slowdown in credit applications by companies and households and the rise in default risks. Indeed, the outstanding loans granted to the private sector fell by 0.5% during the first nine months of 2023 (compared to an increase of 5.6% during the same period of 2022), the bank pointed out. Amid this situation, the BCT reiterated that it will take the «required preventive» measures to preserve the banking sector's sustainability, support any measure which aim at preserving the economic fabric. The BCT underlined that it will maintain the dynamic of resolving the problem of non-performing debts, «as a vector of healthy and sustainable growth of the Tunisian economy». On the regulatory front, the BCT stated that it will continue its efforts aimed at protecting users of banking services and integrating the «Environment, Social and Governance» (ES G) dimension into the framework of regulation, governance and banking risk management. Source: Agence Tunis Afrique Presse