MANAMA: The loans portfolio in Bahrain’s banking system saw an increase of 2.3 per cent in the first five months of the year amounting to BD10,648.2 million at of end-May 2021, with business loans accounting for 50.8pc, and personal loans representing 45pc of total loans and credit facilities.

Reviewing figures during the Central Bank of Bahrain (CBB’s) third board meeting this year, chairman Hassan Al Jalahma said this shows the strength of the banking sector despite the economic challenges resulting from the Covid-19 pandemic as seen in the capital adequacy, liquidity and non-performing loan ratios.

The outstanding balance of total loans and credit facilities provided to resident economic sectors was BD10,413.8m as of end-2020.

The report also indicated an increase in domestic liquidity as of end-May 2021 compared with end-2020, as the money supply in its narrow sense M1 (cash in circulation + private sector deposits on demand in BD) increased by 5.1pc to BD3,070.7m.

In addition, M2 (M1 + private time and savings deposits) increased 4.2pc from BD12,840m as of end-2020 to BD13,382.8m as of end-May 2021. Consequently, broad money supply M3 (M2 + government deposits) increased by 3.5pc to BD14,638.9m as of end-May 2021.

Also noted was the high level of capital adequacy and liquidity in Bahrain.

The capital adequacy ratio (CAR) – the ratio of a bank’s capital to its risk – for the sector as a whole was measured at 18.5pc in the first quarter of 2021, largely unchanged from 18.6pc in the fourth quarter of 2020, and substantially higher than the minimum regulatory requirement of 12.5pc..

The ratio during the first quarter was 19.7pc for conventional retail banks, 18.1pc for conventional wholesale banks, 20pc for Islamic retail banks, and 16.2pc for Islamic wholesale banks.

As for retail banks, total private deposits increased from BD12,247m as of end-2020 to BD12,782.1m as of end-May 2021, an increase of 4.4pc.

Point of Sale (POS) data indicated an increase in the number of transactions during the first five months of 2021, totalling 45,305,246 transactions (60.3pc of which were through contactless cards), an increase of 45.8pc compared with the same period in 2020.

The total value of POS transactions in Bahrain totalled BD1.2 billion (36pc of which were through contactless cards), an increase of 27.3pc compared with 2020.

As for the non-bank sector such as insurance and investment business, stable operations and performance was noted compared with previous periods.

The consumer price index recorded a decrease of 1pc in April 2021 compared with April 2020, and a decrease of 1.5pc compared with December 2020 to reach 96.3 points.

During the meeting, the board also expressed thanks to the kingdom’s leadership for the appointment of Shaikh Salman bin Isa Al Khalifa as deputy governor of CBB.

Other topics on the agenda included the CBB’s performance report and developments in the financial sector for the second quarter of 2021 and the CBB’s financial performance report as of end of June 2021, in addition to the directives issued to banks regarding postponing loan instalments for individuals and companies as part of the efforts by the government through the recent financial aid package.

The postponement of loans for individuals and companies would contribute to citizens’ welfare during these unprecedented circumstances, the members noted.

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