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The Jamaica Banking Association (JBA) has blamed higher interest rates and greater non-bank competition as the reason for banks in Jamaica ranking regionally at the bottom of a recent World Bank report.
When compared with 11 regional counterparts, the Jamaican institutions had the lowest lending and saving portfolios for the country's population size whilst Anguilla topped the list.
"The financial landscape in Jamaica is relatively more sophisticated than that of many of the islands quoted in the ... report," responded Minna Israel in a written statement to Caribbean Business Report queries. "On loans, it is true that Jamaica lags behind most places in (providing) credit to the private sector. This is not surprising given years of economic instability and high interest rates generated by huge fiscal imbalances."
The report — entitled 'Financial Access 2010; the State of Financial Inclusion Through the Crisis' — compiled data on over 100 countries, including Caribbean nations. Barbados and Trinidad & Tobago were notably absent, but larger, Hispanic neighbours were included. The report was done by the World Bank group in conjunction with Consultative Group to Assist the Poor (CGAP).
Regarding deposits, Israel said that banks in Jamaica have competition from securities dealers (some of which are ultimately owned by the banks themselves), but when combined would lift Jamaica's deposits per capita from 33 to 57 per cent which would improve Jamaica's ranking.
"In addition to deposits in commercial banks, Jamaica has a well developed securities dealer market, providing customers with additional options for savings/investments to achieve their financial goals. Therefore, the ranking of deposits in commercial banks in these other countries will be higher due to lack of competing savings/investment products (not an accurate comparison)," she reasoned. "Therefore, comparing Jamaica to the much smaller and less developed islands is misleading when deposits are used."
The report's methodology to measure financial access included comparing deposits and loans with the size of the adult population, the GDP and per capita income.
* Deposits as a percentage of per capita income were lowest in Jamaica at 33.5 per cent, followed by Antigua at 47.9 per cent, St Lucia at 66.6 per cent, St Vincent and the Grenadines at 71.9 per cent, Grenada at 73.7 per cent, St Kitts at 77.7 per cent, and Dominica at 107.2 per cent.
* Average loans as a percentage of per capita income were lowest in the Dominican Republic at 116.9 per cent, followed by Jamaica at 137 per cent, St Kitts at 224 per cent, St Vincent and the Grenadines at 395.7 per cent, Grenada at 405.2 per cent, Dominica at 440.9 per cent, and St Lucia at 524 per cent.
The World Bank report coincides with comments made by finance minister Audley Shaw last week that banks operating in Jamaica made one of the highest returns on equity worldwide up to 22 per cent. He was speaking at the World Bank's Americas Conference held at the Biltmore Hotel in Miami, USA.
Earlier this month, Shaw suggested that more banks, preferably international ones, should be allowed to compete in Jamaica and that this would raise standards, create more competitive products and services, and put an end to monopolistic practices. The Jamaica Debt Exchange (JDX) has resulted in banks returning to core lending activity as they are unable to gorge on government paper which supported profits for some 20 years. As a result, many have resorted to increasing fees and charges to make up for lost revenue.
http://www.jamaicaobserver.com/busin...anking_7991557
When compared with 11 regional counterparts, the Jamaican institutions had the lowest lending and saving portfolios for the country's population size whilst Anguilla topped the list.
"The financial landscape in Jamaica is relatively more sophisticated than that of many of the islands quoted in the ... report," responded Minna Israel in a written statement to Caribbean Business Report queries. "On loans, it is true that Jamaica lags behind most places in (providing) credit to the private sector. This is not surprising given years of economic instability and high interest rates generated by huge fiscal imbalances."
The report — entitled 'Financial Access 2010; the State of Financial Inclusion Through the Crisis' — compiled data on over 100 countries, including Caribbean nations. Barbados and Trinidad & Tobago were notably absent, but larger, Hispanic neighbours were included. The report was done by the World Bank group in conjunction with Consultative Group to Assist the Poor (CGAP).
Regarding deposits, Israel said that banks in Jamaica have competition from securities dealers (some of which are ultimately owned by the banks themselves), but when combined would lift Jamaica's deposits per capita from 33 to 57 per cent which would improve Jamaica's ranking.
"In addition to deposits in commercial banks, Jamaica has a well developed securities dealer market, providing customers with additional options for savings/investments to achieve their financial goals. Therefore, the ranking of deposits in commercial banks in these other countries will be higher due to lack of competing savings/investment products (not an accurate comparison)," she reasoned. "Therefore, comparing Jamaica to the much smaller and less developed islands is misleading when deposits are used."
The report's methodology to measure financial access included comparing deposits and loans with the size of the adult population, the GDP and per capita income.
* Deposits as a percentage of per capita income were lowest in Jamaica at 33.5 per cent, followed by Antigua at 47.9 per cent, St Lucia at 66.6 per cent, St Vincent and the Grenadines at 71.9 per cent, Grenada at 73.7 per cent, St Kitts at 77.7 per cent, and Dominica at 107.2 per cent.
* Average loans as a percentage of per capita income were lowest in the Dominican Republic at 116.9 per cent, followed by Jamaica at 137 per cent, St Kitts at 224 per cent, St Vincent and the Grenadines at 395.7 per cent, Grenada at 405.2 per cent, Dominica at 440.9 per cent, and St Lucia at 524 per cent.
The World Bank report coincides with comments made by finance minister Audley Shaw last week that banks operating in Jamaica made one of the highest returns on equity worldwide up to 22 per cent. He was speaking at the World Bank's Americas Conference held at the Biltmore Hotel in Miami, USA.
Earlier this month, Shaw suggested that more banks, preferably international ones, should be allowed to compete in Jamaica and that this would raise standards, create more competitive products and services, and put an end to monopolistic practices. The Jamaica Debt Exchange (JDX) has resulted in banks returning to core lending activity as they are unable to gorge on government paper which supported profits for some 20 years. As a result, many have resorted to increasing fees and charges to make up for lost revenue.
http://www.jamaicaobserver.com/busin...anking_7991557
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