The Tunisian banking sector has undergone a significant shift in strategy in 2025, moving away from aggressive credit expansion toward a defensive stance focused on liquidity, solvency and balance-sheet stability. This evolution comes as banks confront ongoing economic challenges at home and rising prudential requirements that are reshaping how financial institutions operate and support the economy.
Despite moderate profitability and an overall increase in deposits, lending to the real economy remained subdued, prompting questions about the sector’s long-term role in supporting investment and growth across Tunisia.
Record Deposits Signal Confidence Amid Monetary Easing
One of the standout developments in 2025 was the robust growth in bank deposits, which rose by 7.5 percent to reach 106.7 billion Tunisian dinars by year-end, according to sector analysis by Mac SA.
This strength came despite two cuts in the key interest rate totaling 100 basis points over the year, a move by the Central Bank of Tunisia (BCT) designed to ease monetary policy and stimulate economic activity.
Normally, lower interest rates make traditional savings less attractive. Yet households and businesses in Tunisia continued to park their funds with banks, especially in longer-term time deposits, which jumped by 12.2 percent to 31.9 billion dinars in 2025. This trend suggests a preference for secure financial positions in uncertain economic times rather than higher-risk investments.
Public banks led this deposit growth, outpacing private institutions with a 10.2 percent increase compared to 6.1 percent for listed private firms, reinforcing the traditional role of state-linked banks in mobilising domestic savings.
Loans Remain Weak as Banks Prioritise Prudence
While deposits surged, credit growth remained disappointingly low. Total outstanding loans increased by only 1.8 percent to 86 billion dinars, a modest rise compared with previous years.
Several forces have contributed to this slowdown: Tunisia’s challenging business environment, a still cautious monetary stance for much of 2025, and banks’ preparation for enhanced prudential frameworks, such as Basel III and new IFRS regulations, all encouraged financial institutions to rein in lending rather than expand risk exposure.
Consequently, the loan-to-deposit ratio fell to 80.6 percent, a record low for the sector and a key signal that banks are prioritising liquidity and capital buffers over traditional credit intermediation. In prior years, this ratio hovered well above 90 percent, peaking at 122 percent in 2019.
Instead of lending to businesses and households, banks redirected excess resources into government financing, mainly through Treasury bills and national loans, deepening their dependence on sovereign income and reducing direct support to the private sector.
Revenues Shift from Interest to Market Activity
The shift towards defensive banking in 2025 also reshaped how banks earn money. Total Net Banking Income (NBI) for listed banks reached 7,290 million dinars, up a modest 4.3 percent, but the composition of that income changed dramatically.
Traditionally, the banking sector’s core income has come from interest margins, the spread between what banks earn on loans and what they pay on deposits. In 2025, this critical segment fell by 18.5 percent, reflecting the impact of tighter credit growth and higher funding costs.
In contrast, market activities became the leading contributor to NBI, growing by a substantial 32.4 percent and increasing their share from 35.4 percent to 45.4 percent of total revenue. This rise reflects banks’ growing focus on trading and investment income, especially from bond portfolios and state financing operations.
Meanwhile, fee income stagnated, rising only 1.1 percent, largely due to regulatory caps on banking fees and low adoption of digital services in Tunisia’s financial system.
Public and Private Banks Show Diverging Trends
The sector’s defensive posture masked different performance patterns among individual banks. Public institutions recorded a slight decline in loan volumes of 1.1 percent, whereas private banks managed to grow their loans by 3.8 percent, highlighting more dynamic commercial strategies among private players.
The Banque Nationale Agricole (BNA) remained the largest credit provider with a 16.8 percent market share, growing its loan book by 7.4 percent. Although its solvency ratios comfortably exceeded regulatory requirements, its non-performing loan ratio remained high at 21.15 percent, underscoring lingering credit quality challenges.
Other banks, like UBCI, also demonstrated stronger commercial momentum, indicating that some players are better positioned to balance prudential constraints with profitable lending.
Efficiency Pressures and Profitability
Even as revenues increased modestly, operating expenses grew faster, by 7.3 percent, pushing up the cost-to-income ratio to 48 percent, its highest level since 2019. This trend highlights persistent struggles with cost control and operational efficiency across the sector.
Structural challenges in operational optimisation remain a key concern for policymakers and investors as they shape the sector’s medium-term outlook. However, some banks like BT, BNA and STB managed to improve their efficiency ratios, showing that targeted reforms can pay off even in difficult conditions.
Despite these headwinds, the overall profitability of Tunisian banks remained resilient, with expected aggregated profits rising 5.2 percent to 1.58 billion dinars in 2025, supported by a projected decline in the cost of risk.
On the stock market, the banking index gained 9.65 percent year-to-date, trading at an average price-to-earnings ratio of 10.4x and offering investors a dividend yield around 5.3 percent, albeit with dividend payouts regulated by solvency requirements.
A Cautious Path Forward in 2026
Entering 2026, Tunisian banks are positioned with stronger liquidity and capital buffers, but growth prospects remain cautious. The increased reliance on market activity and government financing offers stability in a fragile environment but also raises concerns about risk concentration and reduced support for private investment.
Many industry observers now view 2025 as a strategic pivot point for the banking sector — with selectivity, risk management and balance-sheet strength taking precedence over rapid credit expansion. The big question for 2026 and beyond is whether this defensive strategy can create space for a return to more dynamic real-economy financing and sustainable growth.
