Banks in hazard zone

Banks have long served as pillars of the economy, but some market watchers told Nosy Tarsee that the outlook is dimming as the sector struggles to keep net interest margins high amid weakening loan demand.
An international investment banker said economic growth is expected to soften as government construction-related spending slows.
The middle-market private sector is likewise taking a more cautious view on expansion. Bright spots remain in large corporate activity and consumer lending.
Most banks now face a choice: Accept slower growth or lean more heavily on consumer loans — a shift that comes with higher provisions and elevated credit risks. With economic growth cooling and the government tightening infrastructure spending, analysts say prudence is warranted.

Industry projections show weaker loan growth of about 8 percent in 2026, reflecting overall slower economic activity. GDP growth expectations have been cut to 4.9 percent from 5.8 percent, largely due to reduced infrastructure outlays.
Consumer spending, however, is expected to stay resilient, potentially supporting further growth in consumer loans.
The government has increased personnel spending and redirected part of its infrastructure budget toward social services and cash-assistance programs.
