Assets and liabilities of banking sector jump, despite pandemic

Data released by the Nethersole Place-headquartered Bank of Jamaica (BoJ) revealed that although the nominal value of the economy had declined by almost 10 per cent (from $2.12 trillion to $1.984 trillion between March of last year and March of this year), because of the negative impact of the deadly COVID-19 pandemic, the assets of the commercial banking sector jumped by almost $200 billion, from $1.69 trillion or 80.9 per cent of GDP to $1.91 trillion or 95.7 per cent of GDP. During this period, also, the loans and advances of the sector climbed in dollar terms from $849.01 billion to $917.71 billion, but the loan to assets ratio dipped from 49.9 to 48.3 per cent. Simply translated, $132.00 billion of the increase in system’s assets had nothing to do with its core function of lending.

                                                           Commercial banks’ assets (j$t/ %gdp)

March 2020      % GDP      March 2021      % GDP

$1.69                  80.90          $1.91               95.70

The value of securities held by the eight members of the commercial banking system jumped from $184.7 billion in March of 2020 to $233.75 billion in March of 2021. Local currency denominated securities climbed from $106.38 billion to $112.73 billion, while foreign currency denominated securities zipped to $121.02 billion from $78.49 billion.  Meanwhile, cash and bank balances rose from $332.16 billion to $355.43 billion, while loans as a percentage of total deposits-loan to deposits ratio also fell from 74.60 to 70.59 per cent during the one-year period under review. The rate of nominal loan growth also tumbled from 15.8 in March of 2020 to 8.8 per cent in March of 2021.

The assets of the Michael Lee Chin-controlled National Commercial Bank Jamaica Limited (NCB) ballooned by approximately $119.00 billion to $729.25 billion; Jamaica Money Market Brokers (JMMB) Bank by $33.00 billion to $116.99 billion; Scotiabank Jamaica Limited (Scotiabank) by almost $5 billion to $450.82 billion and Citibank Jamaica Limited by $6.78 billion to $29.62 billion.

The data released by BoJ also confirmed that the sector is still dominated by the NCB/Scotiabank duopoly as they account for over 60 per cent of the assets and deposit liabilities of the sector. The data also demonstrated that NCB is winning the race as the dominant member of the duopoly with $729.25 billion in assets, compared with $450.82 billion for BNS and $425.44 billion in deposit liabilities, compared with Scotiabank’s $344.17 billion.