Around 92 percent of companies in Cape Verde that handed in their Reports and Accounts by 31 May of this year posted reduced profits, the Portuguese News Network (PNN) reported citing a source from the Directorate General of Taxation (DGCI).
The source said that this was the first time this had happened since 2001 and admitted that the situation “may be even worse when all the companies hand in their Reports and Accounts, namely those of the State, which usually hand them in after the deadline.”
The PNN used the country’s largest bank, Caixa Económica de Cabo Verde, as an example noting that its profits had fallen by over 300 million Cape Verdean escudos, from 432 million escudos in 2011 to 118 million escudos last year.
This information “which shows the difficult financial and economic situation the country is in,” was provided in the same week as the Bank of Cape Verde suspended dividend payments to shareholders of Cape Verdean retail banks in order to boost their capital.
In a statement sent to financial institutions, the central bank said that the banking sector was facing a difficult situation, as stress tests had highlighted vulnerabilities and credit defaults were high.
Credit defaults, which are a sign of an inability to pay off loans by individuals and companies, is the main reason for the current situation and, according to the central bank’s March bulletin, accounted for over 18 percent of all loans granted. (macauhub)