Fitch Ratings says Tunisian banks are navigating a challenging operating environment with stable capitalisation, healthy liquidity and improved reserve coverage, even as asset quality and slow credit growth remain in focus
Tunisian banks are showing resilience through stable capitalisation, healthy liquidity and stronger profitability as the sector navigates a challenging operating environment, Fitch Ratings said in a new report. The ratings agency noted that bank credit profiles continue to face constraints from asset-quality pressures, modest economic growth and subdued private-sector credit demand, but key indicators point to a sector managing headwinds carefully.
Banking-sector credit grew by 2.2% in 1H26, reflecting muted private-sector demand and the state’s higher financing needs, which continue to influence lending flows. Fitch expects real GDP growth of 1.7% in 2026.
The sector’s impaired-loans ratio edged up to 15.1% at end-1H26, while reserve coverage improved to 53.4%, signalling stronger buffers against legacy asset-quality risks. Provisioning needs remain elevated, with the average cost of risk at around 120bp for the 10 largest banks. Public-sector banks continue to focus on sizeable stocks of legacy impaired loans.
Profitability is strengthening: the sector’s return on equity rose to 11.7% in 1H26, up from 10.8% in 2025. Fitch noted that earnings remain constrained by weak credit growth, regulated lending rates, high operating costs and loan impairment charges, but the improvement supports the sector’s capacity to absorb shocks.
Capitalisation is stable, with the sector capital adequacy ratio at 15.3% at end-1H26, comfortably above the 10% regulatory minimum. Fitch cautioned that Basel III-aligned capital rules and the planned introduction of IFRS 9 could reduce capital buffers, particularly at weakly capitalised banks, making proactive capital management important.
Liquidity remains healthy. Deposit growth of 3% in 5M26 outpaced loan growth of 1%, and the sector loans/deposits ratio fell to 93% at end-1H26. Fitch expects banks’ sovereign exposure to increase further in 2027 as they support the government’s higher domestic financing needs.
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