Post a comment 
The Bank of Sierra Leone’s June 2025 Monetary Policy Report has identified both strengths and vulnerabilities within the country’s banking sector. While overall resilience remains intact, the report flags several emerging risks that could threaten financial stability if not addressed.
A key concern is the increase in non-performing loans (NPLs) among certain institutions. Although the sector’s average NPL ratio remains below 10%, five banks, four of them locally owned have exceeded the regulatory limit. The affected loans are heavily concentrated in sectors such as Other Services, Transport, Storage & Communication, and Business Services, suggesting targeted pressure points in the financial system.
The report also points to limited banking sector support for economic growth. Many banks favor government securities over private sector lending due to higher yields and lower risk. As a result, only a small number of commercial banks allocate more than 25% of their assets or deposits to private sector loans, leading to concentrated credit exposure and reduced financing opportunities for small and medium-sized enterprises (SMEs).
This lending pattern, the report notes, hampers economic diversification and heightens vulnerability to changes in government borrowing patterns. A reduction in government debt issuance or falling interest rates could significantly affect bank profitability, underscoring the need for income diversification and stronger engagement with the private sector.
In addition to financial risks, the report highlights rising cybersecurity threats linked to the sector’s digital expansion. The growth of online banking has coincided with an increase in cybercrime and fraud, prompting the Bank of Sierra Leone to call for enhanced investment in cybersecurity infrastructure, monitoring systems, and risk management.
The June 2025 Monetary Policy Report portrays a sector that is well-capitalized but facing growing challenges. The Bank of Sierra Leone recommends targeted interventions to manage high-risk loan concentrations, expand credit to productive sectors, diversify revenue streams, and strengthen cyber defenses. The report concludes that collaboration between regulators, financial institutions, and other stakeholders will be essential in sustaining stability while supporting economic growth.
