Jun 2016 Financial News

Jamaicans double FX deposits in local banks as they save more

Jun 17, 2016

The Bank of Jamaica (BOJ) indicates in its 2015 annual report, which is now available, that Jamaicans doubled their rate of savings in foreign currency during the past year, as represented by inflows in commercial and merchant banks as well as building societies.

The BOJ said that overall, deposit growth was the highest it has been in over 10 years. Domestic currency deposits were the major contributor, with inflows of $44.6 billion compared with $11.2 billion in 2014.

Meanwhile, foreign currency deposits increased by US$229.9 million relative to previous growth of US$105.9 million in 2014.

Total “deposit expansion of 11.9 per cent or $82.1 billion to $771.9 billion (including foreign exchange revaluation gains of $16.7 billion) was the highest reported in 10 years and represented the most significant source of funding for deposit taking institutions (DTIs) during 2015,” the central bank noted in its annual report.

The BOJ said all deposit takers benefited from new deposit funding, with commercial banks dominating the system with inflows of $64.1 billion, followed by building societies, $15.8 billion and merchant banks, $2.1 billion

The year featured strong growth in demand and savings deposits relative to the outturn in 2014 as well as a return to growth in time deposits compared to the previous year, the BOJ said.

During the review period borrowings also increased, with private sector credit expanded by 9.9 per cent ($34.5 billion) relative to 5.5 per cent ($18.1 billion) in 2014.

Under personal and other lending, the pace of growth also accelerated, reaching 9.9 per cent in 2015 relative to 6.4 per cent in 2014.

The central bank said that this acceleration was largely reflected in personal loans to domestic residents as loans to overseas residents slowed. Within personal lending, installment and mortgage credit grew by 12.8 per cent ($7.3 billion) and 18.49 per cent ($3.3 billion), respectively, relative to 10.3 per cent and 12.6 per cent, respectively, in 2014.

The central banks notes that personal loans were the only category to see a rate increase during the year, noting, “With respect to the change in the overall private sector loan rate, there were declines in all loan categories with the exception of personal loans, which continue to reflect downward stickiness.

“In particular, there was a reduction of 90 bps in the weighted average interest rate on installment credit, which followed a decline of 70 bps for 2014. The notable increase of 67 basis points in the weighted average lending rates on personal loans compares to a 79 bps increase in rates on personal loans in the previous year.”

Source:
collindera@jamaicaobserver.com
Jamaica Observer
Friday June 17, 2016

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