Bajans borrowing more

Institutions and households are borrowing more money from financial institutions.

They secured about $264 million in loans during the six-month period ended June 30, the Central Bank of Barbados shared in its economic review for the January to June period.

Governor Dr The Most Honourable Kevin Greenidge reported on this during his second quarter press conference last Thursday at the Courtney Blackman Grande Salle.

He also mentioned an increase in the deposits of domestic and foreign currencies.

“Credit to the non-financial private sector expanded modestly during the first half of 2026, with growth spread across most major sectors. Total credit increased by 2.8 per cent, or $263.6 million,” Greenidge said.

“Credit recorded under the ‘other’ category rose by $104.4 million, including $91.1 million in additional lending to the utilities sector.

“Real estate and other professional services added $93 million, household borrowing increased by $51.6 million, and construction credit rose by $17.5 million. Credit to the distribution sector declined.”

Greenidge also reported a continued decline in non-performing loans as borrowers served their loans better.

“Loan quality continued to improve during the first six months of 2026. The stock of non-performing loans declined by 1.2 per cent from its end-2025 level, as households and firms in the construction and hotels and restaurants sectors improved their repayment performance,” he said.

“The commercial bank non-performing loan ratio fell to 3.4 per cent and the finance company ratio to 6.4 per cent.”

The Governor also said that as Barbadians borrowed more money, they did not neglect making additional deposits at financial institutions.

At the end of June, total deposits were $16.7 billion, comprising $15.1 billion in domestic deposits and $1.6 billion in foreign currency deposits. The overall total was up from $16.3 billion deposited at the end of June last year.

“Deposits increased in both currencies during the first half, with domestic currency balances accounting for most of the dollar increase and foreign currency balances growing faster in percentage terms,” he said.

“Total deposits increased by 2.7 per cent, below the three per cent growth recorded in the corresponding period of 2025. Foreign currency deposits rose by 10.3 per cent, with construction, real estate, hospitality, and distribution firms recording the largest increases.”

Greenidge explained that domestic currency deposits increased by two per cent as households and firms in utilities, manufacturing and the real estate sector raised their balances.

“Construction firms increased their foreign currency balances while reducing their domestic currency deposits. Lower balances held by public financial and non-financial corporations moderated the overall increase,” he said.

“Liquidity ratios declined during the first half but remained ample.
The liquid asset ratio of commercial banks decreased to 27.7 per cent in June from 28.9 per cent at the end of 2025, while the finance company ratio declined to 11.7 per cent from 13.5 per cent.”

The Central Bank’s economic review said that both ratios nonetheless remained comfortably above required levels, while excess domestic cash ratios also fell to 16.8 per cent for commercial banks and 6.3 per cent for finance companies.

Greenidge also said capital buffers “remained strong at end-June 2026, while profitability moderated during the 12 months ended June 2026”.

“Capital adequacy ratios stood at 18.1 per cent for commercial banks and 19.4 per cent for finance companies, comfortably above the eight per cent regulatory minimum. Both commercial banks and finance companies recorded lower profits, partly reflecting a decline in net interest income. Return on average assets stood at 0.8 per cent for commercial banks and one per cent for finance companies.”