The banking sector registered a 32,19 percent increase in aggregate profits to $27,1 billion in that quarter to March 31, 2022, compared to the same period last year, latest statistics from Treasury show.
Growth in banking sector income was largely spurred by non-interest income, which constituted 60.3 percent of total income up from 56,9 percent in the same period last year.
Non-interest income mainly comprised fees and commissions, translation gains on foreign currency denominated assets, as well as revaluation gains from investment properties.
The average prudential liquidity ratio was 61,4 percent as at March 31, 2022, against the minimum regulatory requirement of 30 percent, largely reflecting high stock of liquid assets in the sector.
Banking sector loans and advances increased from $229,9 billion as at December 31, 2021 to $320,4 billion as at March 31, 2022. The growth was largely attributed to the conversion of foreign currency denominated loans equivalent to $142,3 billion, constituting 44,4 percent of total banking sector loans.
As at May 27, 2022, the total loans and advances had significantly increased to $513,1 billion. The level of banking sector financial intermediation improved as reflected by the average loans to deposits ratio of 55 percent compared to 48,3 percent as at December 31, 2021. The improvement in the level of intermediation is largely attributed to the increase in foreign currency denominated loans.
The banking sector continued to support the productive sectors of the economy, as reflected by the ratio of loans to productive sectors to total loans of 77,7 percent.
Total deposits continued on an upward trajectory, recording a 22,2 percent increase from $476,4 billion as at December 31, 2021 to $582,3 billion as at March 31, 2022, dominated by commercial banking sub-sector deposits constituting 90.1 percent.
Foreign currency deposits accounted for 46,6 percent of total deposits, whilst the balance of 53,4 percent was local currency denominated deposits. However, in the first quarter, 14 out of the total 18 banking institutions (excluding POSB with no statutory minimum capital requirement), complied with the new minimum capital requirements that became effective from December 31, 2021.
The non-compliant institutions are pursuing various recapitalisation initiatives to ensure compliance by December 31, 2022, including mergers, organic growth of capital and capital injection by shareholders.
As a result, aggregate banking sector core capital increased by 37 percent from $100,8 billion as at December 31, 2021, to $138,2 billion as at March 31, 2022, mainly attributed to capitalisation of retained earnings.
Meanwhile, the Central Bank said it continues to monitor asset quality on an ongoing basis, to ensure healthy balance sheets of banking institutions. – Herald