The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BAHAMIAN commercial bank surplus liquidity almost hit the $2.8bn mark at end-January 2023 even though the decline in the industry’s deposit base outpaced the contraction in domestic credit, it was revealed yesterday.

Excess liquidity, which represents assets available for lending if banks can find suitable borrowers and risks, hit a new high as the industry struggled to find new opportunities. “Monetary developments for the month of January were marked by moderated build-up in banking sector liquidity, even though the reduction in the deposit base surpassed the decline in domestic credit,” the Central Bank of The Bahamas said in its January economic update.

“Specifically, excess reserves - a narrow measure of liquidity - grew by $14.1m to $1.942bn, a slowdown from the $48.3m expansion in the preceding year. Similarly, excess liquid assets - a broad measure of liquidity - increased by $26.4m to $2.799.2bn, exceeding the prior year’s gain of $8.5m.”

The regulator added: “During the review month, external reserves reduced by $30m to $2.565bn, albeit lower than the previous year’s decline of $44.1m. Contributing to this outturn, the Central Bank’s net purchases from commercial banks moderated to $7.1m from $48.2m in the preceding year.

“Further, commercial banks’ transactions with customers shifted to a net sale of $0.7m from a net intake of $73.7m a year earlier. Meanwhile, the Central Bank’s net sales to the public sector narrowed to $47.8m from $91.5m in 2022.” Elsewhere, foreign currency sales for current account transactions jumped by 21.2 percent to $674.1m, relative to January 2022.

“Leading this outturn, payments for ‘other’ current items - primarily credit and debit card transactions - grew by $74.4m. Further, outflows for non-oil imports rose by $33.1m, oil imports by $18.9m and travel-related transactions by $4.4m. In contrast, factor income remittances decreased by $12.5m and transfer payments by $0.5m,” the Central Bank said.

“Total Bahamian dollar credit contracted by $5m during the review month, a reversal from a $74.9m growth in 2022. Underpinning this development, net claims on the Government declined by $17.5m, a shift from an $81.9m expansion a year earlier.

“In contrast, private credit grew by $12.6m, a turnaround from a $5.9m reduction in the preceding year. Specifically, the increase in commercial credit extended to $23.4m from $9m in the prior year. Further, the contraction in consumer credit slowed to $6.9m from $23.4m a year earlier,” the regulator added.