Bermuda’s banking sector recorded net after-tax income of $86.3 million in the second quarter of the year, the Bermuda Monetary Authority has reported.

The BMA, in its quarterly banking digest, said that it was an increase of 36.6 per cent, or $23.1 million, over the previous quarter.

Net interest income grew by 14.1 per cent, or $17 million, to $137.7 million compared with the previous quarter.

Non-interest income increased by 4.4 per cent, or $3.2 million, to $76.1 million.

Total income amounted to $213.9 million, a 10.5 per cent or $20.3 million increase over the previous quarter.

Total expenses for the quarter were $126.5 million, a decline of 2.2 per cent or $2.9 million compared to the previous quarter.

The net charge-offs for uncollectible loans were $6.5 million in the second quarter, up 14 per cent or $0.8 million from the previous quarter and slightly lower than the $6.6 million reported in the second quarter of 2021.

The ratio of annualised net charge-offs to total loans was 0.3 per cent at the end of the second quarter.

Total assets in the sector fell by 4.6 per cent, or $1.3 billion, during the quarter, driven by the declines in interbank deposits, which were down by 33.8 per cent or $2.2 billion.

The BMA said this decline was partially offset by growth in investments – up 5.6 per cent or $0.7 billion – and loans and advances, which were up 2.4 per cent or $0.2 billion.

Year over year, total assets fell by 3.6 per cent or $1 billion, driven by the decrease in interbank deposits, which were down by 15.7 per cent or $0.8 billion, as well as loans and advances – down 1.2 per cent or $1 billion – and investments, which were down 0.8 per cent or $0.1 billion.

Total liabilities fell by 4.6 per cent or $1.2 billion to $24.9 billion quarter over quarter.

Customer deposits declined by 4.7 per cent or $1.2 billion, driven by demand deposits, which were down 7.5 per cent or $1 billion, as well as time deposits – down 2.6 per cent or $0.1 billion – and savings deposits, which were down 1.2 per cent or $0.1 billion.

Year over year, total liabilities decreased by 2.7 per cent or $0.7 billion, driven by declines in demand deposits – down 8.1 per cent or $1.1 billion – and time deposits, which declined 2.6 per cent or $0.1 billion.

Total loans to the real estate sector declined by 1.8 percentage points to 57.7 per cent of total outstanding loans at the end of the second quarter, while loans to other financial institutions declined by 0.3 percentage points to 21.5 per cent at quarter end.

“Other” loans grew by 1.4 percentage points to 16.7 per cent and loans to “other businesses and services” increased by 0.7 percentage points to 4.1 per cent of total outstanding loans at the end of the second quarter.

Sovereign securities accounted for more than half of the banking sector’s investment portfolio, increasing by 1.4 percentage points quarter over quarter to 51.1 per cent of total investments.

Securitised (non-equity) investments fell by three percentage points to 37.6 per cent over the quarter and other investments grew by 1.9 percentage points to 3.1 per cent over the same period.

The banking sector’s loan to deposit ratio grew by 2.4 percentage points quarter over quarter and 0.7 percentage points year over year to close at 35.1 per cent at the end of the second quarter.

The quarter over quarter increase was driven by the increase in loans and advances to $8.5 billion, up by $0.2 billion, and the decrease in customer deposits to $24.2 billion, down $1.2 billion.

The report said the banking sector’s capital position remained stable and above the minimum requirements and buffers.

At the end of the second quarter, the risk asset ratio and CET1 declined marginally to 22.5 per cent and 20.3 per cent, respectively, while the leverage ratio rose marginally to 6.3 per cent.

There was $190 million in notes and coins in circulation at the end of June, up from $187 million at the end of the first quarter of the year, and up by $8 million year over year.

The Bermuda dollar money supply was $4.12 billion, a slight decline from $4.13 billion at the end of the first quarter – and an increase year over year on June 2021’s figure of 4.05 billion.