THERE HAS BEEN a near $393 million surge in deposits in the banking system since December.
The boost comes mainly from foreign currency inflows and household savings, the Central Bank of Barbados has reported in its first quarter economic review.
Businesses and individuals have also borrowed about $100 million more since the end of last year.
It means that total deposits at commercial banks, finance companies and credit unions reached $16.2 billion at the end of March, compared with $14.8 billion in the same period last year, and $15.8 billion at the end of last year.
Reporting on the financial sector developments during his report of the economy’s first quarter performance, Central Bank Governor Dr Kevin Greenidge said that the financial system remained stable between January and March.
Strong deposit growth
“Credit quality improved, liquidity remained high, and profitability increased. Commercial banks and finance companies maintained capital buffers well above regulatory requirements. Strong deposit growth and a decline in non-performing loans underscored the system’s continued resilience,” he said.
On deposits, noted that “foreign-currency inflows and household savings drove deposit growth and liquidity”.
“Total deposits increased by 2.5 per cent compared to December 2024. Foreign-currency deposits increased by 19.1 per cent, reflecting inflows from the global business sector and other non-residents, lifting the foreign-currency share of total deposits by 1.3 percentage points to 9.3 per cent,” he said.
“Domestic-currency deposits rose by one per cent, driven primarily by higher household balances. Liquidity also improved, with liquid asset ratios increasing by 1.9 percentage points for banks and 0.2 percentage points for finance companies.”
Borrowing also expanded, with credit to the non-financial private sector increasing during the first three months of the year.
“Outstanding credit rose by 1.2 per cent compared to December 2024. Business credit grew by two per cent – $51.2 million – with large increases in hotels and restaurants and real estate and other professional services. Household credit expanded by 0.8 per cent – $48.3 million – led by continued growth in mortgage lending.”
Credit to Central Government only increased slightly, moving from $3.19 billion at the end of last year to $3.2 billion at the end March. Borrowing by the rest of the public sector declined from $136.8 million at the end of December to $131.8 million at the end of the first quarter.
Most of Government’s financing in the 2024/2025 fiscal year came from long-term domestic instruments policy-based loans from the International Monetary Fund and other institutions.
Greenidge said the strength of the financial sector was exemplified by improved asset quality and strong capital levels.
Repayment capacity
“Asset quality continued to improve during the first quarter. Non-performing loans declined, reflecting stronger borrower repayment capacity,” he said.
“The non-performing loans ratio for commercial banks fell to 3.9 per cent, down from 4.1 per cent in December 2024. For finance companies, the ratio declined to nine per cent from 9.7 per cent, with most of the improvement occurring in the household segment.”
The Governor added: “Capital levels remained strong, and bank profitability improved. expenses.” Commercial banks recorded a capital adequacy ratio 19.9 per cent, while finance companies held a ratio 20.2 per cent, both well regulatory minimum. net interest income supported increased profits among In contrast, profitability finance companies declined slightly, reflecting higher non-interest expenses.”
SigniaGlobe Financial Group Inc. chief executive officer Paul Ashby has evidence of the improved economic performance Barbadians to borrow Speaking before the Bank’s first quarter review, said: “I think it is because have a very low unemployment scenario right now, construction is doing well, which is sign, tourism has done the latter part of the year continuing into this year.
All of those are features exemplify an economy potentially growing and and so when you have happening, people will risk for entrepreneurial and people will definitely earning more.
“And as people earn want to improve their so you will see things mortgages. We are not the residential mortgage but definitely personal he said.
“People travelling and definitely vehicle loans. ripple effect is the improvement overall of tourism, construction, recorded ratio of finance ratio of well above the minimum. “Higher supported among banks. profitability among declined higher Financial executive has seen improved performance prompting borrow more. the Central review, he because you unemployment construction is a good done well in year and year. features that economy that is and active have that will take more entrepreneurial activities, definitely be earn more, they their in lives like more not heavy on mortgage business, personal loans,” and as well, loans. So the improvement construction, and of course, the general distribution trade sector.”
Data in the Central Bank’s economic review shows that foreign currency deposits increased from $1.27 billion at the end of December to $1.51 billion at the end of March.
Ashby said that with Barbadians able to open foreign currency accounts, foreign exchange trading was an opportunity to cash in on.
“We do a lot of commercial transactions so we buy US dollars on the local market, and then we sell those US dollars to corporate entities to buy goods from overseas. Because of the buoyancy of the market, we actually did reasonably well in that space as well,” he said.
Another line of revenue
“Also on the investment side, we also do attract US dollar investments, and we then actually invest those US dollars as well. So that’s another line of revenue that has been successful for us as well in 2024 and continues into 2025.”
He explained: “Our cash position has been boosted in large part by US dollars but obviously we still have Barbados dollars in there as well, but we did increase our US dollar intake. One of the things that we’re out in the market trying to attract now is more deposits.
“We want to get US dollar deposits and we want to get more Barbados dollar deposits because more that we can do that the more opportunities we have to support the market in terms of lending and also offering people a good return at the same time.”
The financial behaviour of Barbadians is also reflected in the Central Bank report beyond their saving and borrowing habits.
Greenidge said that 1.7 per cent expansion in the wholesale and retail sectors reflected increased consumer demand for food, beverages, household appliances, and motor vehicle parts.
“Electricity, gas, and water output increased by 2.6 per cent, due to higher consumption across residential, commercial, and industrial users, including ports, tourism-linked enterprises, and medical facilities,” he stated.
Greenidge anticipates that the financial sector will remain resilient this year.
“Credit to the private sector is projected to increase steadily, supported by ongoing labour market improvements,” he said in the Central Bank’s latest outlook.
“Banks and finance companies are expected to maintain robust capital buffers, while liquidity levels should remain elevated. Financial stability indicators continue to point to a healthy and sound system.” (SC)
