Bajans have more than $14 billion in savings

by Marlon Madden

Barbadians continue to increase their savings while paying down their loans faster than they are borrowing from financial institutions.

This is according to the latest Central Bank data, which also revealed that during the January to March 2022 review period foreign currency deposits continued to expand, due mainly to activities within the tourism and real estate sectors.

Total deposits stood at $14.2 billion at the end of March 2022, compared to $13.1 billion at the end of the corresponding period last year.

Total domestic currency deposits in commercial banks, credit unions and other deposit-taking institutions at the end of the review period was $13.1 billion, while foreign currency deposits accounted for $1.1 billion of savings, despite historically low interest rates.

“Domestic-currency deposits grew by 2.4 per cent due to Government spending and heightened foreign exchange inflows during the quarter. While this growth was partly reflected in the balances of households, the build-up was slower than the previous year, as domestic consumption picked up and prices increased,” explained Central Bank Governor Cleviston Haynes.

“Foreign-currency deposits expanded to account for 7.6 per cent of total deposits, above the 5 per cent share recorded one year earlier. This expansion was largely due to the sale of real estate and increased activity in the tourism sector,” he added.

Haynes indicated that while Barbadians continued to incur debt during the three months under review, the rate of repayment continued to outweigh new credit.

“Credit to the non-financial private sector by deposit-taking institutions remained relatively flat compared to a 1 per cent decline for the first three months of 2021. On the corporate side, the value of new loan disbursements was one per cent higher than the corresponding period a year earlier but, after accounting for repayments, most sectors, with the exception of construction, manufacturing and real estate, registered declines in credit balances,” he said.

“New lending to households grew at a faster rate than the corresponding period in 2021. Credit card activity picked up with the resumption of travel and economic activity, but repayments continued to exceed new credit.

“These events resulted in the outstanding credit card balance being just above the value of debt incurred during the period. Mortgage balances also continued to contract, as repayments outweighed the growth in new credit. New bridging loans to households were higher than last year, but overall supply of funds remained weak,” he explained.

The Central Bank Governor further reported that consolidation of non-performing loans of banks and deposit taking finance and trust companies during the review period reversed the upward trend experienced during the height of the pandemic when people struggled to repay their loans. Noting that the financial system remained stable during the quarter, Haynes added that the improved credit quality reduced provisions and contributed to higher profitability and a strong capital base.

“Liquidity in the financial system remained elevated, with banks continuing to maintain substantial excess cash with the Central Bank. The growth in excess liquidity slowed over the past year from the preceding 12-month period, but the build-up during the last three months was stronger than that of the first nine months of the fiscal year, due to the Government stimulus and private sector inflows of foreign exchange. Interest rates on deposits and loans remained at historically low levels,” he said.

marlonmadden@barbadostoday.bb