Financial institutions resilient in the face of COVID-19

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Bank of Jamaica Governor, Richard Byles [Photo: Rudranath Fraser]

By Douglas McIntosh

KINGSTON, Jamaica, (JIS) – The Bank of Jamaica (BOJ) says that balance sheets of deposit-taking institutions (DTIs) continue to indicate that they are growing, properly capitalised and are in compliance with prudent liquidity standards.

Governor Richard Byles, said notwithstanding the “moderating impact” of the coronavirus (COVID-19) pandemic, loan growth for DTIs has remained “fairly resilient”, despite a slowing in the pace.

Byles advised that the stock of private-sector loans and advances recorded year-on-year growth of 8.8 percent in March, relative to 15.8 percent for the corresponding period in 2020.

“Loan quality for the system, while naturally showing some weakening, remains well below our threshold for concern and is fully provided for by the system,” he added, while speaking during the BOJ’s recent digital quarterly media briefing.

Byles also advised that financial institutions have facilitated clients with approximately $210 billion in payment accommodations since the pandemic’s onset. He pointed out, however, that the outstanding stock of moratoria, as of February 2021, totalled $65 billion, reflecting a significant decline since the start of the pandemic.

The BOJ Governor said within the context of the fall in the stock of loans under moratorium, the improving economic environment as well as the financial system’s strong capacity to absorb unexpected losses, the BOJ reached an agreement with finance holding companies (FHCs) and DTIs in April to resume the distribution of dividends to large shareholders.

“However, given that significant uncertainties associated with the pandemic remain, the bank continues to urge financial institutions to remain prudent in their decision to declare and distribute dividends,” Byles emphasised.

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