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Banks’ Q4 net earnings fall by nearly 16%

Bermuda banks’ Bermuda dollar loans to deposits dropped significantly from 84.2 per cent in December 2020 to 77.5 per cent in December 2021.

Bermuda dollar loans and advances dropped from $3.2 billion to $3.1 billion over the same period.

The quarterly banking digest from the Bermuda Monetary Authority also shows the trend in domestic money supply over the same period.

There was $201 million in notes and coins in circulation in December, up from only $177 million the same month the year before.

The Bermuda dollar money supply was $4.095 billion, only 3.6 per cent higher than the December before.

The total assets of Bermuda’s banks shrunk 1.5 per cent or $400 million down to $26.8 billion in quarter four of 2021, when compared with the prior quarter.

And combined, the banks reported lower earnings for the quarter, with after-tax net income falling by 15.7 per cent to $54.7 million.

The BMA figures also reported the building up of loan loss provisions during the pandemic due to negative economic activity.

The amount of uncollectible loans written off (net of recoverables) in Q4 of 2020 was $12.8 million, up from $3.3 million in the prior quarter.

For Q4 of 2021, the net charge-offs amounted to $2.2 million for the quarter, down 16.3 per cent from the prior quarter and 83.1 per cent down from Q4 of 2020.

Banks’ provisions for loan losses were higher in the earlier period mainly because of uncertainties associated with the pandemic, which contributed to the increase in expected credit losses.

The report also noted that banking sector capital ratios improved slightly over the period, with the risk asset ratios and CET1 up by 0.5 per cent to 22.8 per cent and up by 0.4 per cent to 20.5 per cent, respectively.

While assets fell in the quarter-to-quarter comparison, year over year, they were up $1.2 billion or 4.7 per cent, as increases in interbank deposits rose by a billion dollars or 25.6 per cent.

Loans and advances were up 1.2 per cent or $0.1 billion and investments were up by about $0.1 billion.

Total liabilities decreased by two per cent or $0.5 billion to $24.7 billion in the fourth quarter.

Quarter-over-quarter customer deposits fell 1.6 per cent, as demand deposits fell by 7.5 per cent, partly offset by the increase in savings deposits by 8.2 per cent or $0.6 billion.

BMA Quartery Banking Digest reports combined net income of Bermuda’s banks for the fourth quarter was $54.7 million.(File photograph)

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Published April 06, 2022 at 7:40 am (Updated April 06, 2022 at 10:55 am)

Banks’ Q4 net earnings fall by nearly 16%

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