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Jamaica National Bank (File photo)

Jamaican deposit takers pass the JM$2- trillion asset mark

Jamaica National Bank (File photo)

Despite the challenges presented in 2020 by the spread of the coronavirus (COVID-19) deposit-taking institutions (DTIs) in Jamaica increased momentum in the new year and grew assets past the JM$2-trillion mark, a new goalpost for the sector, for the quarter ended March 31, 2021.

The latest prudential report produced by the Bank of Jamaica (BOJ) shows that total assets held by the island’s eight commercial banks, one merchant bank, and two building societies increased 12.4 per cent to JM$2.1 trillion, up from JM$1.8 trillion for the similar period ending March 31 in 2020.

A view of the Noel Nethersole statue standing in front of Bank of Jamaica in downtown Kingston, Jamaica. (Photo: Miami Herald)

The island’s sole merchant bank, Cornerstone Trust & Merchant Bank Limited (formerly MF&G Trust & Finance Limited), representing the fastest-growing segment, saw assets its improve by 31.8 per cent to JM$6.3 billion as at March 31, 2021.

The bank continues a pattern of rapid growth since March 31, 2020, when it saw assets almost doubling to JM$4.8 billion, a 95 per cent improvement over March 2019.

Commercial banks were the second-fastest-growing institutions in the sector with assets climbing 12.9 per cent, from JM$1.7 trillion at March 2020 to JM$1.9 trillion.

Assets for the island’s two building societies, Victoria Mutual and Jamaica National Building Society, grew seven per cent to JM$170.9  billion, up from $159.8 billion in 2020. Their combined performance fell below last year’s, when asset growth was eight per cent year over year as at March 2020.

Victoria Mutual Building Society recorded both growth in deposits and profit during 2020. (File photo)

Overall, average asset growth for all deposit-taking institutions was 12.4 per cent.

The Bank of Jamaica also supervises the island’s 25 credit unions, but awaits legal changes before including them in its prudential assessment.

Profit performance

Profitability also improved for the commercial banks and building societies in the deposit-taking sector.

For commercial banks, pre-tax profitability improved 14.9 per cent year over year, outpacing last year’s 13.9 per cent performance.

National Commercial Bank in Half-Way-Tree, St Andrew, Jamaica. Commercial banks were the second-fastest-growing institutions in the deposit-taking sector.
(Photo: SSL Invest)

Building societies also reported an increased profitability of 11 per cent, a significant improvement over a decline of 68.8 per cent in pre-tax profitability as at March 2020.

However, Cornerstone saw pre-tax profitability shrink by 19.7 per cent, which was an improvement over the 152.4 per cent decline in pre-tax profitability as at March 2020.

The merchant bank had no non-performing loans (NPL’s) for the March quarter, similar to 2020 and 2019. 

Comparatively, NPLs for the commercial banking sector grew 31.9 per cent year over year, contrasting with 23 per cent growth in 2020 and 0.3 per cent in 2019.

Likewise, building societies saw NPLs climb, increasing by 27.6 per cent in the first quarter of 2021 compared to a decline in NPLs of 11.6 per cent as at March 2020.

Capital levels and loan provisioning were adequate for all sectors.