Deposits held by Bermuda's banks shrunk by more than 13 percent in the six months from last October through March.

Figures published by financial regulator the Bermuda Monetary Authority's reflect the toll taken on the Island's economy during the bleakest months of the global economic crisis.

As of September 30 last year, deposits held in the Island's banks totalled $20.83 billion, according to the BMA Regulatory Update. By the end of March this year, that number had plunged to $18.04 billion.

Those two quarters were marred by plunging stock markets and the most choking period of the credit crisis, unleashing turmoil in the world economy.

In Bermuda, jobs were cut, imports fell and retailers saw their takings fall as the economy slammed on the brakes after years of dramatic growth.

The first-quarter fall in deposits was seven percent, contributing to the six percent fall in banks' total assets.

Bermuda dollar money supply — the amount of cash in circulation and available for spending at a given time — also fell by 0.8 percent in the first three months of the year, but was still 2.1 percent higher than at the same time in 2008.

Also revealed in the data was the extent to which Bermuda's banks and deposit companies are reliant on foreign currency deposits.

Of the $18 billion of deposits held at the end of March, only $4.2 billion was in Bermuda dollars. The remaining $13.8 billion — or 76 percent of the total — was denominated in foreign currencies.

This has led to a situation where the banks, to an increasing degree, are funding their Bermuda dollar mortgages and loans partly through foreign currency deposits.

At the end of March, the banks had loaned out 132.5 percent of their Bermuda dollar deposits in local currency loans. The deficit widened from 127.5 percent at the end of last year, and from 118.7 percent at the end of the first quarter in 2008.

The economic contraction also stung the Island's funds industry, as nervous investors pulled out their money and asset values plummeted.

By the end of March the net asset value of Bermuda-domiciled funds was $158.92 billion — bringing the industry down to 2004 levels.

Funds' combined value declined by $12.27 billion, or seven percent, in the first quarter — the fourth consecutive quarter of decline for the industry.

Over the year ending March 30, 2009, the Island's funds industry saw its net asset value fall by more than $90 billion, or 36 percent.

"Redemptions continued through the quarter, while new subscriptions remained low, reflecting market trends," the BMA commented. "The rate of redemptions, however, began to slow towards the end of the quarter."

While the latest data only includes the first three months of the year, there is reason to believe that the second quarter should have brought a significant improvement.

Stock markets have bounced back dramatically from their March 9 lows. The S&P 500, an index tracking the share prices of 500 of the largest US-listed corporations, gained 15 percent in the April through June period.

The positive trend has lured billions of investor dollars back into the market. Rising equity and commodity values have also helped funds to boost their net asset values.