September 1, 2014 / 2:07 PM / in 3 years

Moody's expects growth in Congo's banking sector

ABIDJAN, Sept 1 (Reuters) - Quickening economic growth, a fast-expanding mining sector and rising domestic consumption should boost Democratic Republic of Congo’s fledgling banking sector over the next two years, ratings agency Moody’s said on Monday.

Banking in Congo remains significantly underdeveloped. The country has one of the lowest rates of banking penetration in the world with less than 5 percent of adults estimated to have an account.

“While credit risks will remain elevated and profitability will be modest, we expect a benign operating environment over the next two years to support strong lending growth.”

The report projects real GDP growth of about 10 percent for 2014 and 2015. The Congolese economy expanded 8.3 percent in 2013, according to preliminary government figures.

Congo’s banking sector has grown consistently since a peace accord in 2002 helped usher in a gradual recovery of an economy battered by decades of dictatorship and one of the world’s deadliest wars. Banking sector assets in 2013 were $4.2 billion, up from $300 million in 2002.

There were 18 banks in Congo as of the end of 2013, a three-fold increase over 2002. In July, Congo’s largest bank, Rawbank, became the country’s first to be rated by Moody‘s, which issued the bank a B3 global local-currency deposit rating.

The report cautioned that a number of risks could derail that progress. Congo’s economy is heavily dependent on commodities prices and the cash-strapped government has little capacity to come to the aid of troubled banks.

Security risks present another challenge to the economy, particularly in the mineral-rich east, where armed rebel groups continue to operate, the report said. (Reporting by Aaron Ross; Editing by Susan Fenton)

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