Cape Verde Banking Sector Hits Near-Record Profits in 2025
The Cape Verdean banking sector maintained near-record profitability in 2025, even as growth showed signs of a slight cooling compared to the previous year. According to newly released data from the Bank of Cape Verde (BCV), the industry remains in a position of significant financial strength.
The return on equity (ROE) before taxes reached 18.08% in 2025. While this is a marginal decrease from the 18.52% recorded in 2024, it still represents the second-best performance for the sector since tracking began in 2010. Similarly, the return on assets (ROA)—a key measure of operational efficiency—hit 1.94%, also the second-highest level on record.
Liquidity Hits Historical Peaks
As profitability stabilized, liquidity within the banking system surged to unprecedented levels. The ratio of liquid assets to total assets rose to a historical high of 28.30%, up from 25.89% in 2024. This increase underscores a robust capacity for local banks to meet short-term financial obligations.
Further strengthening the sector’s safety net, the ratio of liquid assets to short-term liabilities hit a record 35.40%. Additionally, the solvency ratio climbed to an all-time high of 24.82%, while the ratio of non-performing loans (NPLs) dropped to a near-record low of 5.11%.
However, the data also revealed a shift in lending behavior. The transformation ratio, which measures loans against deposits, fell to 52.19%—the lowest level recorded in the 15-year data series. This indicates that banks are holding more cash and lending less in proportion to their deposits.
External Warnings Persist
Despite these glowing indicators, international financial monitors are urging caution. The International Monetary Fund (IMF), the World Bank (WB), and the Budget Support Group have highlighted structural vulnerabilities in the Cape Verdean economy.
Experts warn that the economy remains overly concentrated in tourism, construction, and commerce, making the banking system sensitive to external global shocks. There are also ongoing concerns regarding financial risks associated with public companies. Global partners continue to advocate for the diversification of the economy and comprehensive public sector reforms to ensure long-term stability.
A Concentrated Market
Cape Verde currently operates with eight commercial banks. The central bank designates four of these as having “systemic importance.” These institutions are required to maintain specific capital reserves to absorb potential economic shocks, ensuring the stability of the national financial system.
Image: Pexels – oussama laabidate
