Côte d’Ivoire Banking Growth to Slow as US–Iran Conflict Weighs on Macro Outlook, Fitch says

• Côte d’Ivoire Banking Growth to Slow as US–Iran Conflict Weighs on Macro Outlook, Fitch says

Côte d’Ivoire’s banking sector is expected to lose momentum in 2026 as the extension of the US–Iran conflict through April dampens the country’s macroeconomic outlook and softens demand for credit, according to BMI, a Fitch Solutions company.

Fitch Solutions, in a note, said the external shock has led to lower growth forecasts for the banking sector, arguing that weaker macro conditions will result in slower balance-sheet expansion across lenders.

BMI now expects growth in the banking sector’s assets to decelerate sharply from 23.2% year-on-year at end-2025 to 12.0% at end-2026, as loan growth eases and overall credit creation slows.

Read the full details below:

The extension of the US-Iran conflict has increased downside risks for Côte d’Ivoire’s banking sector in 2026, primarily through indirect macroeconomic channels rather than direct trade or financial exposure. Ongoing disruptions in the Strait of Hormuz have driven a sharp increase in global energy prices, raising Côte d’Ivoire’s import bill and eroding household and corporate purchasing power. Together with lower cocoa prices, we have cut our real GDP growth forecast for 2026 from 6.4% to 5.8%.

Although the authorities have so far kept domestic fuel prices unchanged, we expect higher energy and fertiliser costs to pass through gradually over coming months. At the same time, the sharp correction in global cocoa prices will weigh on rural incomes, compounding pressure on private consumption and agri‑linked segments of the banking system. These dynamics have led us to revise down our banking sector growth projections for 2026.

We now forecast asset growth to slow sharply from 23.2% y-o-y at end‑2025 to 12.0% at end‑2026 (see charts below). This deceleration reflects a combination of unfavourable base effects following exceptional deposit inflows in 2025, weaker balance sheet expansion amid softer nominal growth and more cautious bank lending in an environment of heightened uncertainty.

We also think loan growth will moderate slightly, easing from 10.9% y-o-y at end‑2025 to 10.3% at end‑2026. We expect accommodative monetary policy from the Banque Centrale des États de l’Afrique de l’Ouest (BCEAO) to support credit supply as they affect banks’ ability and willingness to lend by lowering banks’ marginal funding costs while improving their net interest margins at a given lending rate. However, weaker demand conditions will constrain uptake across both household and corporate segments. Businesses exposed to agriculture, transport and energy‑intensive activities are likely to defer longer‑tenor investment borrowing, tilting credit demand towards shorter‑term working capital facilities.

Deposit Growth To Normalise As Liquidity Tailwinds Fade

Deposit growth will remain a key driver of balance sheet dynamics, albeit at a slower pace. We forecast deposit growth to fall from 22.6% y-o-y at end‑2025 to 14.0% at end‑2026 as election‑related liquidity injections fade and weaker real income growth weighs on savings accumulation (see chart below, left). Elevated food and energy prices will further erode households’ ability to build deposits, while corporates may draw down cash buffers to manage higher operating costs.

Nevertheless, our projected deposit growth of 14.0% for 2016 remains robust by regional standards and reflects structurally improving financial inclusion, digital banking adoption and continued formalisation of the economy. Strong infrastructure investment under the 2026‑2030 National Development Plan will also support deposit mobilisation from construction‑ and services‑linked activity, partially offsetting external headwinds. Broad money, primarily domestic deposits, has grown rapidly in recent months and remains well above the WAEMU average (see chart above, right).

We expect liquidity conditions in the banking system to remain comfortable. The loan‑to‑deposit ratio has fallen significantly over the past year, reflecting strong deposit inflows and more disciplined lending (see charts above). We expect banks to prioritise liquidity preservation amid heightened external risks, which will limit balance sheet stress even as growth slows.

IMF Flags Stronger Capitalisation And Improved Risk Controls

While near‑term growth prospects have weakened, the structural resilience of Côte d’Ivoire’s banking system has improved materially, a point underscored by recent IMF assessments. The Fund highlighted in its Fifth Review published February 2026 that the soundness of the banking system has strengthened in a context of tighter risk control and capital consolidation, reducing vulnerabilities to external shocks.

The average risk‑weighted capital adequacy ratio reached 16.3% as of end‑June 2025, comfortably above the WAEMU prudential minimum of 11.5% and up from 15.1% a year earlier. This improvement reflects ongoing recapitalisation following the regulatory decision to double minimum paid‑in capital requirements from CFAF10bn to CFAF20bn. Although the compliance deadline runs through end‑2027, all but three banks had met the higher threshold as of June 2025 (latest available data), strengthening loss‑absorption capacity.

Loan quality has also continued to improve. The gross non‑performing loan (NPL) ratio declined to 6.2% in January 2026 (see chart above, right), while the net NPL ratio fell to just 1.5% in June 2025, outperforming WAEMU averages and approaching levels seen in stronger SSA banking systems. This improvement reflects both a reduction in legacy problem loans and more conservative underwriting standards in recent years, which should help contain credit risk even as macroeconomic conditions deteriorate modestly. We could see a slight deterioration in loan quality if the conflict persists for longer than expected, but we do not expect the NPL ratio to reach levels seen in the past.

Sovereign‑Bank Nexus Remains A Key Risk To Monitor

Despite stronger fundamentals, structural risks remain. Government exposure continues to account for about one-quarter of banks’ assets, reflecting the government’s continued reliance on domestic financing to fund ongoing fiscal deficits (see chart below). While access to international markets and regional reserve pooling via the BCEAO reduces near‑term financing stress, a prolonged period of weaker growth or higher security spending could intensify sovereign‑bank linkages and crowd out private sector credit.

That said, active debt management, IMF‑supported reforms and improving fiscal governance mitigate the risk of acute stress. Enhanced AML/CFT frameworks, progress toward exiting the FATF grey list and stronger supervision further support financial system stability.