2019 Financial Stability Report

5.0 Outlook

elevated levels of concentration on lending

The ECCU financial sector remained

portfolios.

stable throughout 2019 . Most indicators

point to moderate risk. The credit to GDP

Risks have evolved since the last FSR.

gap, a measure of the financial cycle is still

They stem largely from the slowdown in

negative but entering into an expansionary

economic growth and the increasing trend in

phase.

interconnections especially in one country.

A more protracted slowdown in growth

Nonetheless, vulnerabilities persist and

could help amplify those pre-existing

new risk have come to the fore . The

vulnerabilities in the financial sector.

vulnerabilities, which persist, stem

Especially NPLs and weak profitability.

especially from the legacy NPLs in the

commercial banking system, along with

Given the levels capital in the financial

sector , the sector is expected to remain

stable even in the face of slower growth.

Notwithstanding, increased supervision of

the sector is warranted as this juncture given

the potential risks on the horizon.

22