Banking sector’s net profits decline in second quarter
The Bermuda banking sector’s net profit after tax amounted to $130.8 million in the second quarter of the year, a 3 per cent or $4 million decline compared with the previous quarter, a report by the Bermuda Monetary Authority reveals.
The quarterly banking digest produced by the island’s financial services regulator said net interest income increased by 0.9 per cent to $189.3 million, while non-interest income totalled $85.4 million, a 2.5 per cent ($2.2 million) decrease from the last quarter.
Total income for the quarter was $274.7 million, representing a decline of 0.2 per cent ($0.5 million).
The total expenses for the quarter, including operating and non-operating costs, were $143.1 million, up by 2.5 per cent or $3.5 million from the previous quarter.
The sector’s efficiency ratio rose by 1.4 percentage points to 52.1 per cent compared with the previous quarter.
The BMA said the banking sector’s total assets declined 1.2 per cent during the quarter, consistent with the decline in customer deposits.
The organisation said this decline is reflected in decreased loans and advances, down 3.6 per cent ($0.3 billion), and interbank deposits, down 2.8 per cent ($0.1 billion).
Conversely, investments increased by 0.9 per cent ($0.1 billion) over the same period.
Total assets fell by 0.4 per cent ($0.1 billion) from a year ago.
The BMA said this decline is the net impact of interbank deposits, which increased by 45.8 per cent ($1.1 billion), offset by reductions in loans and advances, which fell by 9.1 per cent ($0.8 billion), and investments, which fell by 3.4 per cent ($0.4 billion).
Total deposit liabilities amounted to $21.2 billion at the end of the quarter, having declined by 0.9 per cent ($0.2 billion) from the previous quarter.
This decrease was reflected in a 3.2 per cent ($0.3 billion) decline in demand deposits and a 1.5 per cent ($0.1 billion) decline in savings deposits.
However, time deposits increased by 3.7 per cent ($0.2 billion), partially offsetting the overall reduction in total deposit liabilities.
Total deposit liabilities remained unchanged at $21.2 billion from a year ago.
The coverage ratio of provisions to non-performing loans rose by 1.8 percentage points to 27.2 per cent, whereas the proportion of non-performing loans relative to total loans decreased by 0.4 percentage points to 5.3 per cent.
The BMA said the sector’s capital adequacy and leverage metrics remain well above the minimum regulatory standards.
The domestic money supply within the local economy rose by 1.5 per cent compared with the previous quarter.
The BMA said this increase can be attributed to a combination of higher customer deposits, which were up 1.5 per cent, and a decrease in the cash reserves held by banks, which were down 16.7 per cent.
Over the same period, the circulation of notes and coins dropped by 5.4 per cent.
For the full report, see “Related Media”
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