Net profit in Bermuda’s banking sector was up nearly a third year-on-year at the end of the third quarter of 2023, the island’s financial regulator has revealed.

Releasing the figures in its quarterly banking digest, the Bermuda Monetary Authority said net profit for the year increased by 32.9 per cent compared with September 2022, mainly due to the combined impact of higher total income and lower operating expenses.

Total income rose by 11.6 per cent, while total expenses fell by 2.1 per cent year-on-year.

Net profit for the quarter declined by 13 per cent to $130.1 million, down $19.5 million from the prior quarter.

The BMA said this was mainly owing to the combined impact of lower total income and higher operating expenses. Total income fell by 2 per cent while total expenses rose by 10.7 per cent quarter-on-quarter.

Net interest income amounted to $196.8 million, a 1.3 per cent (or $2.7 million) decrease over the same period.

Non-interest income totalled $77.3 million, down 3.8 per cent (or $3 million) from the prior quarter.

Total income for the quarter was $274.1 million, representing a 2 per cent (or $5.7 million) decline from the prior quarter.

Total operating and non-operating expenses for the quarter amounted to $143.6 million, an increase of 10.7 per cent (or $13.9 million) from the prior quarter.

The sector’s efficiency ratio stood at 52.4 per cent, up 6.1 percentage points over the previous quarter.

As reported by the island’s banks, the banking sector’s assets increased by 1.3 per cent, or $300 million, to $24.2 billion during the quarter. The increase in total assets was driven by the growth in customer deposit liabilities during the quarter.

The BMA said the quarter-on-quarter growth was reflected in the $800 million, or 33.3 per cent, increase in interbank deposits, partly offset by decreases in loans and advances ($300 million) and investments ($400 million).

Year-over-year, total assets contracted by 5.1 per cent, or $1.3 billion, also driven by the $1.5 billion decline in customer deposit liabilities.

The contraction in net assets is reflected in the declines in loans and advances (down 4.5 per cent or $400 million) and investments (down 8.8 per cent or $1.1 billion). These declines were partially offset by an increase in other assets.

The percentage of non-performing loans to total loans was 5.3 per cent and was unchanged from both the prior quarter and the prior year.

The domestic loans to customer deposits fell by 2.6 percentage points to 71.8 per cent from the prior quarter, largely owing to the decline in Bermuda dollar loans, which were down 3.4 per cent to $2.8 billion.