Increase in commercial bank lending

THERE was an almost three per cent increase in commercial bank lending to the non-financial private sector last year.

This comes as banks increased their profitability in 2017, according to the latest economic review by the Governor of the Central Bank of Barbados, Cleviston Haynes.

He said that the 2.7 per cent increase in the lending is the highest since 2012.

It comes as the average lending rates at commercial banks continue to trend downwards, following the 2015 liberalisation of domestic rates.

According to Haynes, the weighted average loan rate fell to about 6.6 per cent, its lowest since 1990.

At the same time and at the end of October last year, the weighted average deposit rate was 0.2 per cent as it fell in early 2017 before stabilising later.

The Governor said that domestic deposits grew marginally, as increased placement of deposits with commercial banks by credit unions, pension funds and insurance companies was offset by a fall in the deposits of individuals.

The Bank Governor said that the banking system remained stable during 2017, with banks registering high levels of capital adequacy, a moderate reduction in non-performing loans and above normal liquidity ratios.

“The fall in loan delinquency, together with the widening of the interest rate spread, contributed to a modest improvement in bank profitability which nonetheless continued to be affected by the increased share of low yielding liquid assets in banks’ portfolio,” said the Governor.

He also pointed out that as a result of having adjusted its monetary policy since 2017, the excess securities ratio declined from 7.4 per cent to 8.3 per cent at the end of December.