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The Trinidad and Tobago Banking System: Some Stylized Facts Ewart S. Williams Governor Central Bank of Trinidad and Tobago.

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Presentation on theme: "The Trinidad and Tobago Banking System: Some Stylized Facts Ewart S. Williams Governor Central Bank of Trinidad and Tobago."— Presentation transcript:

1 The Trinidad and Tobago Banking System: Some Stylized Facts Ewart S. Williams Governor Central Bank of Trinidad and Tobago

2 Selected Economic Indicators 1995-20002001-2006 p Growth in Real GDP (%)4.99.2 Energy4.814.6 Non Energy5.16.3 Unemployment14.79.1 1995200020012006* Inflation (end of period) % change3.85.63.29.6 Core3.04.22.43.9 Food Prices10.413.47.527.4 Gross Official Reserves (US$Mn)352.11405.51,876.06,089.5 External Current A/c Balance (US$Mn)269.9544.3446.03,340.1 * Inflation and Reserves data are for Sept. 2006; External A/c data are provisional to June 2006 Source: Central Statistical Office and Central Bank of Trinidad and Tobago

3 Commercial Banks Changes in Assets and Liabilities 1996-20002001-2005 Assets Loans11.717.4 Investments15.110.1 Liquid Funds10.310.2 Liabilities Deposits 8.6 13.4 Fund Raising Instruments18.36.3 Borrowings 24.4 16.9 (Annual Average Growth Rates – per cent)

4 Conglomerates Share of Total Assets - 2004 ConglomeratesTotal Assets ($Mn)% of System Assets CL Financial Group23,268.823.50 RBL Group18,831.519.00 RBTT Financial Holdings 18,668.218.90 GHL Group5,450.75.50 TOTAL66,219.266.9% Source: Central Bank of Trinidad and Tobago

5 Contribution to Total Assets of the Financial System Type of Institution 199519992001200220032004 p 2005 p Central Bank15.713.013.914.513.515.117.8 Commercial Banks41.240.236.835.433.732.129.4 Finance Companies & Merchant Banks4.36.15.45.8 8.37.0 Trust & Mortgage Finance Companies7.77.410.28.37.86.85.1 Development Banks2.01.5 1.21.11.41.1 Credit Unions5.14.23.22.62.42.01.7 Insurance Companies11.212.914.113.815.116.213.5 Thrift Institutions0.20.1 0.0 National Insurance Board6.77.37.17.78.17.96.6 Stock Exchange0.0 Mutual Funds2.74.34.97.89.57.615.7 Deposit Insurance Corporations0.40.50.60.5 0.4 Home Mortgage Banks1.31.21.01.11.41.21.0 Trinidad & Tobago Mortgage Finance1.41.31.21.11.00.90.7 Total100 (per cent)

6 Aggregate Mutual Fund Values and Commercial Bank Deposits Source: Central Bank of Trinidad and Tobago

7 Sectoral Distribution of Commercial Bank Loans PERCENT OF AVERAGE TOTAL LOANS20012002200320042005 Real Estate Mortgages5.25.55.49.912.5 Public Sector6.59.45.68.414.6 Agriculture0.90.70.50.60.4 Petroleum4.32.72.91.61.5 Manufacturing10.712.510.08.57.6 Construction3.74.16.16.34.6 Distributive Trades7.87.57.35.97.0 Transport, Communication & Storage5.03.53.02.32.0 Finance, Insurance & Real Estate11.711.517.215.815.2 Personal Services2.43.94.04.23.1 Consumer Loans38.537.435.732.731.0 Miscellaneous3.41.32.23.92.4 TOTAL100 Source: Central Bank of Trinidad and Tobago

8 Exposure of Domestic Banking System RegionsDec-04Dec-05Jun-06 Caribbean 6,331 6,320 6,216 Belize 416 316 313 Dominica 13 11 Grenada 558 311 365 Barbados 1,789 1,571 1,533 Jamaica 1,954 2,579 2,161 St Lucia 1,601 1,532 1,833 Rest of the World 4,269 4,580 7,984 Total 10,600 10,900 14,200 % of Total Assets14.814.616.9 Source: Central Bank of Trinidad and Tobago (TT$ Millions)

9 Macro Prudential Indicators Selected Countries Macro Prudential Indicators - 2005 USUK*JamaicaBarbadosT & T Prudential Capital Adequacy12.312.717.813.018.2 Non-Performing Loans to Gross Loans 0.51.92.35.52.2 Loan Loss Provisions to Gross Loans0.7………3.7 Profitability Return on Assets1.30.73.61.92.5 Return on Equity12.910.9…15.1**20.2 * Data up to 2004 ** Data up to 2003

10 Interest Rate Spreads 199520002001200220032004 Barbados6.607.058.007.747.617.30 Bahamas9.067.777.237.228.117.47 Belize9.1010.8011.1010.009.308.80 Guyana9.9210.4010.9012.9813.2312.49 Jamaica30.7413.2011.8711.3812.6211.68 Suriname0.0013.6012.4012.9012.5011.40 Trinidad and Tobago9.4610.509.128.648.346.74 Average OECS6.347.357.217.478.287.11 Average Caribbean8.378.818.568.719.198.18 Source: ECLAC based on official data

11 Distribution of Loans by Interest Rate Bands 200320042005Jun-06 0 % - 5 %99119 5 % - 7 %16201614 7 % - 8 %691315 8 % - 9 %11251719 9 % - 10 %1511178 10 % - 12 %2014 19 Over 12 %23131117 Total100 (per cent) Source: Central Bank of Trinidad and Tobago

12 Challenges for Regulation the presence of financial conglomerates; the increase in cross-border lending; the introduction of higher risk lending

13 Pending Legislative Amendments The Central Bank is currently amending legislation to: (i)provide for the supervision of conglomerates; (ii)to accommodate a harmonized approach to regulation among regional jurisdictions, including the exchange of information; (iii)to emphasize risk-based capital adequacy; and (iv)to strengthen risk management and governance procedures

14 The end

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