Barbadians Boost Savings Deposits by $1.2 Billion Despite Low Interest Criticisms - Central Bank Report 2024

Criticisms about low interest paid on savings persisted last year, but that did not stop Barbadians from depositing another $1.2 billion in their accounts at commercial banks, finance houses and credit unions.

This is based on latest information from the Central Bank of Barbados, which is reporting a surge in local currency savings and foreign dollar deposits “on the strength of activity in the global business, real estate, and household sectors”.

In reviewing the economy’s performance in 2024 during his first press conference for the year, Central Bank Governor Dr. Kevin Greenidge and his team attributed the significant growth in deposits to “increased economic activity”.

“Domestic-currency deposits rose by 7.2 per cent, facilitated by activity in the real estate, professional services, and household sectors,” he said.

“Foreign-currency deposits expanded by 22.4 per cent, reversing the 0.2 per cent decline recorded in 2023. Increased inflows from the global business, hospitality, and construction sectors supported this growth.”

The Central Bank’s numbers show that $14 billion of the funds in savings accounts at deposittaking institutions by December were transferable, meaning that they comprised call deposits, demand deposits and savings deposits with unrestricted withdrawal privileges.

Most of the money saved at commercial banks, finance companies and credit unions is in local currency and this increased by about $982 million between 2023 and 2024, totalling $14.5 billion at the end of last year.

Borrowing more

With individuals and organisations about to open foreign currency bank accounts, this category of savings was $1.26 billion at December 31 – an increase of $232.2 million over 2023’s amount.

Barbadians are also borrowing more, Central Bank data indicates. Loans to the

non-financial private sector, which includes households, expanded by $373 million last year.

“Credit to the non-financial private sector expanded across most sectors. Lending by deposit-taking institutions to the non-financial private sector grew by 4.4 per cent in 2024, compared to 2.6 per cent in 2023,” Greenidge said.

“Real estate and professional services led this expansion with a 13.1 per cent increase, followed by households, which recorded a 2.9 per cent rise.

“However, credit to the construction, other business, and distribution sectors contracted by 2.1 per cent, 2.9 per cent, and 0.7 per cent, respectively. This growth in credit reflects the financial sector’s ongoing support for economic activity,” he noted.

The Governor also reported that “credit quality improved across the financial sector” as non-performing loans (NPLs) for both finance companies and commercial banks declined.

This was a reflection of “enhanced credit quality, resulting from tourism-related activities and broader economic growth,” he explained.

Greenidge also shared that “during the year, the NPL ratio for finance companies fell from 12.2 per cent to 9.5 per cent, while the ratio for commercial banks decreased from five per cent to 4.1 per cent”.

By December 2024, “finance companies and banks reduced by their stock of NPLs by 16.7 per cent and 6.5 per cent, respectively, underscoring the sector’s strengthened financial health”.

For the Central Bank boss, the improved credit quality, credit growth, and deposit expansion meant that “the financial sector remained stable in 2024”. (SC)