Manama: Mahmood Rafique, Editor: The banking and financial sector showed resilience in 2020 despite the challenging conditions posed by the pandemic during the year, according to the financial stability report.
The report, which was reviewed during the Central Bank of Bahrain’s (CBB) Board of Directors meeting and led by Hassan Khalifa Al-Jalahma on Sunday, showed the strength of the banking sector despite the economic challenges due to COVID-19 as indicated by the capital adequacy, liquidity and non-performing loan ratios.
The Board reviewed the topics on the agenda and approved the CBB’s annual report and audited financial statements for the year 2020, in addition to reviewing the CBB’s activities for 2020.
The Board then reviewed the topics on the agenda including the CBB’s performance report and developments in the financial sector for the first quarter of 2021 and the CBB’s financial performance report as of end of February 2021.
During the meeting, the board also reviewed the report on key economic, monetary and banking indicators for the year, and the measures taken by the CBB to contain the repercussions of Covid-19.
The report indicated improvement in economic indicators in the third and fourth quarters compared to the second quarter of 2020, as the real non-oil GDP increased by 1.3%, as a result of the financial and economic stimulus package launched by the government of the Kingdom of Bahrain exceeding BD4.5 billion, in addition to the gradual opening of some sectors and commercial activities. However, annual growth decreased by 5.4% in 2020, as a result of a decrease of 7% in the non-oil sector, while the consumer price index decreased by 2.3% compared to an increase rise of 1.0% in 2019.
The report also indicated an increase in domestic liquidity in 2020, as the money supply in its narrow sense M1 (cash in circulation + private sector deposits on demand in BD) increased by 11.2% totaling BD2,921.1 million at the end of December 2020 compared to the same period in 2019. The money supply in medium term, M2 (M1 + private time and savings deposits) increased to BD12,840 million at the end of December 2020, an increase of 6.5%. Money supply in its broad sense, M3 (M2 + government deposits) increased by 3.5% totaling BD14,151.3 million at the end of December 2020.
As for retail banks, total private deposits increased from BD11,517.1 million at the end of December 2019 to BD12,247.0 million at the end of December 2020, an increase of 6.3%. The report also indicated that the outstanding balance of total loans and credit facilities provided to resident economic sectors amounted to BD10,413.8 million at the end of December 2020 compared to BD9,736.4 million at the end of December 2019, an increase of 7.0%, with institutions accounting for 51.2%, individuals at 45.3% and the government sector at 3.5% of total loans and credit facilities.
Point of Sale (POS) data indicated an increase in the number of transactions during the 2020, totaling 83,785,810 transactions (38% of which were through contactless cards), an increase of 13.7% compared to 2019. The total value of POS transactions in Bahrain totaled BD2.3 billion (18.7% of which were through contactless cards), a decrease of 4.2% compared to 2019.
The Chairman and members of the Board of Directors expressed their thanks and appreciation to the Kingdom’s leadership for the efforts and measures taken to contain the repercussions of covid-19, which contributed to mitigating the negative effects on the national economy and enhancing financial performance despite low oil prices and negative impact on some sectors and commercial activities, such as aviation and tourism.
