Total assets in Bermuda's banking sector were up 1.3 per cent to $24.1 billion in the first quarter of the year, a report by the Bermuda Monetary Authority reveals.

However, the BMA's quarterly banking digest said, total assets in the sector were down 1.2 per cent year-on-year.

The island's financial services regulator said the increase over the previous quarter was mainly driven by a $1 billion, or 38.5 per cent, growth in interbank deposits, but this was partially offset by decreases in investments (down $0.3 billion), loans and advances (down $0.2 billion) and other assets (down $0.3 billion).

In other report highlights, the banking sector’s net profit after tax decreased by 38.9 per cent from the prior quarter due mainly to an accounting adjustment in Q4 2023 as a result of the implementation of the Corporate Income Tax Act.

Excluding this one-time adjustment, the net profit after tax in Q1 declined by only 2 per cent.

The banking sector’s total income for the quarter was $275.2 million, a rise of 0.6 per cent, or $1.6 million, from the previous quarter.

Net interest income increased slightly from the prior quarter, reaching $187.6 million.

Non-interest income amounted to $87.6 million, an increase of 1.4 per cent, or $1.2 million, compared with the previous quarter.

Meanwhile, the ratio of provisions to non-performing loans continued to decline, falling by 0.9 percentage points to 25.4 per cent, while the percentage of non-performing loans to total loans increased slightly by 0.3 percentage points to 5.7 per cent.

Total operating and non-operating expenses were $139.6 million, which was 2 per cent, or $2.8 million, higher than the previous quarter.

The sector’s efficiency ratio increased slightly, rising by 0.7 percentage points to 50.7 per cent compared with the previous quarter.

Over the quarter, total deposit liabilities increased by 2.4 per cent, or $0.5 billion, to $21.4 billion.

On a year-on-year basis, total deposit liabilities fell by 1.8 per cent, or $0.4 billion.

Savings deposits decreased by 8.5 per cent, or $0.6 billion, and demand deposits were down 7.8 per cent, or $0.8 billion.

Conversely, time deposits increased by 22.7 per cent, or $1 billion, partially offsetting the year-on-year decrease in total deposit liabilities.

The supply of money within the local economy increased by 1.4 per cent for the quarter, largely due to growth in domestic customer deposits, which rose by 1.2 per cent to $3.9 billion.