2018 Financial Stability Report

Figure 16: Commercial Banks Dollar Change in Loans and Advances (in millions)

Figure 17: Business and Household Credit as a per cent of GDP 5

0 10 20 30 40 50 60

100 200 300 400

Households Business

(600) (500) (400) (300) (200) (100) 0

Jun-09

Jun-10

Jun-11

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

Source: Eastern Caribbean Central Bank (ECCB)

Note: The shaded bars indicate periods of recession. Source: Eastern Caribbean Central Bank and Staff calculations

Figure 17 shows loans disaggregated across two main categories: households and businesses. Both categories have grown relatively slower than GDP, particularly after the financial crisis. In recent periods (2017 and 2018), growth outcomes in both categories have been moderate. Business credit appears to have bottomed out, declined at a decreasing rate for 2018.

There was continued strengthening of the sector as indicated by the increasing CAR and the declining NPL ratios. The aggregate CAR of the banking sector was 19.1 per cent at the end of 2018, 0.4 percentage points above the ratio at the end of 2017, (Figure 18). The increase in the CAR was due to outpaced growth in total regulatory capital (6.0 per cent), relative to adjusted risk-weighted assets at 3.6 per cent. Simultaneously, the tier-one capital ratio increased to 16.8 per cent from 16.3 per cent at the end of December 2017.

5 Business credit tends to track the business cycle more closely compared to household credit.

Financial Stability Report 2018

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