Bermuda’s banking sector posted stronger profits and improved capital strength in the third quarter of 2025, according to the Bermuda Monetary Authority’s latest Quarterly Banking Digest.

Banks recorded a net after-tax profit of $128.8 million, a 10 per cent increase quarter-on-quarter, as higher income combined with lower expenses. Total income rose 3.2 per cent to $283.8 million, while total expenses fell 2.5 per cent to $142.1 million, helping push the sector’s efficiency ratio down nearly three percentage points to 50.1 per cent.

The BMA said the sector’s capital position also strengthened during the quarter. The Common Equity Tier 1 ratio and risk asset ratio both increased by one percentage point, to 28.4 per cent and 28.5 per cent, respectively, remaining well above regulatory minimums. The leverage ratio edged higher to 7.6 per cent, compared with the minimum requirement of 5 per cent.

Total banking sector assets rose 1.2 per cent to $24.8 billion, in line with continued deposit growth. Total deposits increased 1.8 per cent during the quarter, driven primarily by higher demand deposits, while lending activity remained largely flat. As a result, the sector’s loan-to-deposit ratio remained low at 35.3 per cent, signalling continued excess liquidity.

Asset quality showed some modest deterioration. The ratio of non-performing loans to total loans increased slightly to 4.9 per cent, while provisions as a percentage of non-performing loans declined to 23.3 per cent, reflecting lower provisioning during the quarter.

All banks continued to meet minimum liquidity and funding requirements, including the Liquidity Coverage Ratio and Net Stable Funding Ratio, the authority said.