by Marlon Madden
Barbadians continue to put money into savings as they pay down their credit card debt.
This indication has come from Central Bank Governor Cleviston Haynes, who revealed that for the first three months of this year there was a modest growth in deposits, though slower than in the same quarter last year.
Haynes also pointed out that while outstanding credit to companies increased “moderately”
during the quarter, credit card debt and mortgages declined.
“New lending by deposit-taking institutions remains below pre-COVID levels.
In 2020, new loans were 70 per cent of 2019 levels and this trend was sustained into the first quarter,” said Haynes.
During the quarter, new lending from banks and deposit-taking institutions was $104.7 million lower than it was in 2020, at approximately $279.9 million, of which $158.5 million was in the form of personal loans.
“Outstanding credit, including for working capital, owed by companies in the utility, distribution, communication, hospitality and health sectors rose moderately, but debt of households and real estate companies fell notably, with credit card debt and mortgages registering declines during the quarter,” said Haynes, as he delivered his first quarter economic review and outlook for 2021.
Outstanding credit card debt stood at just over $250 million at the end of March this year, compared to more than $300 million at the end of the same period last year.
In relation to savings, he pointed out that deposit growth was slower than in 2020, as foreign currency deposits, which generally account for about six per cent of total deposits, declined.
“Domestic currency deposits continued to grow, partly because of larger balances held by households.
With higher deposits, savings of households in deposit-taking institutions grew from 68.2 per cent of gross domestic product at the end of March 2020 to 90.8 per cent by the end of the first quarter of 2021,” he said.
Haynes said as a result of the continued build-up of liquidity in the financial system over the past three months, deposit-taking institutions did not need to access the Central Bank’s discount window.
“With the high excess liquidity, interest rates remained at historically low levels,” he added.
Non-performing loan ratio of banks increased slightly from 7.2 per cent at the end of December last year to 7.9 per cent at the end of March this year, reflecting a deterioration of credit quality mainly in loans to the hospitality, household and real estate sectors, said Haynes.