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Bank accounts grow to $400b - Still plump despite competing investment schemes
published: Friday | December 7, 2007
The Bank of Jamaica building, Nethersole Place, in Kingston. - File
Jamaicans, up to the end of September, had a little over $406 billion deposited in the island's commercial, merchant and mortgage banks - a near 30 per cent jump over a two-year period that helped to push the asset base of the sector past the $650 billion mark.
Commercial banks held 75 per cent of the sector's deposits and accounted for a similar proportion of its total assets.
The latest statistics on the sector, just released by their regulator, the Bank of Jamaica, counter the popular perception of cash fleeing these institutions for the so-called investment schemes, but market analysts warned that any real picture of the impact of th would demand a deeper and broader review of the entire financial market.
"At the end of the day, the money must end up in the banking system," explained Curtis Martin, the president of Capital and Credit Merchant Bank (CCMB).
"Money may move from bank to bank.
"So, to understand what may be the impact of these institutions, you also have to look at those companies that deal in securities, what happens on the foreign exchange market and whether there are reflows," Martin said. "This requires deep analysis."
7.5 per cent growth
For example, securities firms and their subsidiaries, at the end of 2006, grew funds management by 7.5 per cent to reach $580.7 billion, according to data from the Financial Services Commission which regulates investment firms.
No new data have been released since then.
A raft of schemes has emerged in Jamaica in recent years offering investors of upwards of 100 per cent of their cash, raising concerns among regulators over their lack of transparency and resistance to being policed by the FSC on the basis that they are private clubs.
Even warnings by the Government that it will not bail out investors if these schemes collapsed have apparently not sated the appetites of Jamaicans for their products and commercial banks have come off the worse in public rows over claims by some of the schemes that their accounts are being frozen.
In the face of the controversy, and often public declarations by supporters of th schemes of their willingness to stand by them and to pull their cash out of commercial banks, new published data on the formal sector are being closely watched.
No cause for panic
But according to BoJ's statistics, there is no cause for panic by the formal banking system - at least not based on the September figures.
At that time, total deposits in the bank system were 406.4 billion, up $54.65 billion or 15.5 per cent from the $351.7 billion of a year earlier, which itself represented a 12 per cent increase on September 2005.
By end of September, total loans by the banking system were just shy of $249 billion, up approximately 30 per cent on the previous year after a near 18 per cent jump between 2005 and 2006.
The combined assets of the institutions have been growing at an average 15 per cent a year over the past two years, and stood at approximately $651.1, up $83.4 billion from $567.6 billion a year earlier.
Across-the-board advances
While the commercial banking sector dwarfed its cousins in the broad banking system, the advances were across the board.
For instance, deposits in building societies jumped $11.48 billion or 16 per cent, to $81.76 billion at September 2007.
In the case of the licensed financial institutions, their deposits grew $3.3 billion or a whopping 25 per cent to $16.4 billion.
Their lending reached $14.8 billion at September, up 48 per cent from $10 billion a year ago.
Even funds under management by the merchant banks grew during the review period - by $23 million or 12 per cent, to $211 million.
published: Friday | December 7, 2007
The Bank of Jamaica building, Nethersole Place, in Kingston. - File
Jamaicans, up to the end of September, had a little over $406 billion deposited in the island's commercial, merchant and mortgage banks - a near 30 per cent jump over a two-year period that helped to push the asset base of the sector past the $650 billion mark.
Commercial banks held 75 per cent of the sector's deposits and accounted for a similar proportion of its total assets.
The latest statistics on the sector, just released by their regulator, the Bank of Jamaica, counter the popular perception of cash fleeing these institutions for the so-called investment schemes, but market analysts warned that any real picture of the impact of th would demand a deeper and broader review of the entire financial market.
"At the end of the day, the money must end up in the banking system," explained Curtis Martin, the president of Capital and Credit Merchant Bank (CCMB).
"Money may move from bank to bank.
"So, to understand what may be the impact of these institutions, you also have to look at those companies that deal in securities, what happens on the foreign exchange market and whether there are reflows," Martin said. "This requires deep analysis."
7.5 per cent growth
For example, securities firms and their subsidiaries, at the end of 2006, grew funds management by 7.5 per cent to reach $580.7 billion, according to data from the Financial Services Commission which regulates investment firms.
No new data have been released since then.
A raft of schemes has emerged in Jamaica in recent years offering investors of upwards of 100 per cent of their cash, raising concerns among regulators over their lack of transparency and resistance to being policed by the FSC on the basis that they are private clubs.
Even warnings by the Government that it will not bail out investors if these schemes collapsed have apparently not sated the appetites of Jamaicans for their products and commercial banks have come off the worse in public rows over claims by some of the schemes that their accounts are being frozen.
In the face of the controversy, and often public declarations by supporters of th schemes of their willingness to stand by them and to pull their cash out of commercial banks, new published data on the formal sector are being closely watched.
No cause for panic
But according to BoJ's statistics, there is no cause for panic by the formal banking system - at least not based on the September figures.
At that time, total deposits in the bank system were 406.4 billion, up $54.65 billion or 15.5 per cent from the $351.7 billion of a year earlier, which itself represented a 12 per cent increase on September 2005.
By end of September, total loans by the banking system were just shy of $249 billion, up approximately 30 per cent on the previous year after a near 18 per cent jump between 2005 and 2006.
The combined assets of the institutions have been growing at an average 15 per cent a year over the past two years, and stood at approximately $651.1, up $83.4 billion from $567.6 billion a year earlier.
Across-the-board advances
While the commercial banking sector dwarfed its cousins in the broad banking system, the advances were across the board.
For instance, deposits in building societies jumped $11.48 billion or 16 per cent, to $81.76 billion at September 2007.
In the case of the licensed financial institutions, their deposits grew $3.3 billion or a whopping 25 per cent to $16.4 billion.
Their lending reached $14.8 billion at September, up 48 per cent from $10 billion a year ago.
Even funds under management by the merchant banks grew during the review period - by $23 million or 12 per cent, to $211 million.
