Total assets in Bermuda’s banking sector contracted by 2.1 per cent, or $500 million, in the fourth quarter of 2023, the island’s financial regulator has revealed.

Releasing the figures in its quarterly banking digest, the Bermuda Monetary Authority said the decline was owing to decreases in interbank deposits by 18.8 per cent, or $600 million, and other assets, by 10 per cent, or $100 million.

Investments increased slightly by 1.8 per cent, or $200 million, offsetting some of the decline in total assets.

Year-on-year, total assets were down by 8.8 per cent, or $2.3 billion, driven by the decline in customer deposit liabilities.

The BMA said the decrease in total assets is reflected in the declines in interbank deposits, down 36.6 per cent, or $1.5 billion; loans and advances, down 5.6 per cent, or $500 million; and investments, down 3.3 per cent, or $400 million.

Total deposit liabilities fell by 2.8 per cent, or $600 million, from the previous quarter to $20.9 billion.

The BMA said the decline was primarily driven by the decrease in savings deposits, which were down 12.5 per cent, or $900 million, but partially offset by the increases in time deposits, which were up 2 per cent, or $100 million, and demand deposits, which were up 2.1 per cent, or $200 million, over the same period.

Compared with 2022, total liabilities were down 10.3 per cent, or $2.5 billion, to $21.7 billion, driven primarily by the net decline in customer deposits, the regulator said.

Demand deposits were down 21.3 per cent, or $2.6 billion, and savings deposits fell by 10 per cent, or $700 million.

Time deposits grew by 16.3 per cent, or $700 million, offsetting some of the year-on-year declines in total liabilities.

Meanwhile, the banking sector’s net after-tax income amounted to $137.6 million, representing a 5.7 per cent, or $7.5 million, increase over the prior quarter.

Net interest income amounted to $187.2 million, a 5.9 per cent, or $9.6 million, decrease over the same period.

Non-interest income totalled $86.5 million, up 11.9 per cent, or $9.2 million, from the prior quarter.

Total income for the quarter amounted to $273.6 million, down 0.2 per cent, or $400,000 from the prior quarter.

Total operating and non-operating expenses for the quarter amounted to $136.8 million, a decline of 4.7 per cent, or $6.8 million, from the prior quarter.

The sector’s efficiency ratio declined, falling by 2.4 percentage points to 50 per cent over the previous quarter.

The BMA said the ratio of provisions to non-performing loans has declined by 1.1 percentage points to 26.3 per cent, while the ratio of non-performing loans to total loans has increased slightly by 0.1 percentage points to 5.4 per cent.

The regulator said the capital adequacy and leverage measures remain well above the minimum regulatory requirements.

At the end of 2023, there was $182 million of notes and coins in circulation, down from $193 million at the conclusion of the third quarter.