Economic and Financial Review - June 2019

June 2019 Economic and Financial Review DOMESTIC ECONOMIC DEVELOPMENTS

the period in question, about 12 basis points below the level at end of December 2018. Regional Governments Securities Market Activity on the primary market for government securities slowed during the first half of 2019. Gross funds issuance amounted to $513.7m, which was 5.1 per cent below the level recorded during the comparable period of the prior year. This total represented the issuance of twenty-five (25) securities, the same number of auctions held during the first six months of the last two years. Only the government of Saint Vincent and the Grenadines increased its activity on the RGSM. The governments of Antigua and Barbuda and The Commonwealth of Dominica maintained the same level of activity as the corresponding period last year. Meanwhile, the governments of Grenada and Saint Lucia slightly reduced their presence on the market. The securities comprised of one (1) six-year bond, one (1) five-year bond, one (1) three-year bond, one (1) two-year bond and twenty-one (22) Treasury bills - thirteen (13) of which were 91 days, five (5) were 180 days and three (3) were 365 days. The six-year and three-year bonds were valued at $20.0m and $10.0m, respectively and issued by the government of Saint Lucia. The government of Saint Vincent and the

review period. The ratio of liquid assets to total deposits plus liquid liabilities was unchanged at 48.4 per cent at the end of June 2019 and remained above the stipulated floor of 25.0 per cent. The loans and advances to total deposits ratio fell by 0.7 percentage points to 58.1 per cent, well below the ECCB’s range of 75.0 to 85.0 per cent. The asset quality of commercial banks improved marginally during the review period. The ratio of non- performing loans to total loans declined by 1.1 per cent to 10.2 per cent, higher than the tolerable limit of 5.0 per cent. The banking system remained adequately capitalized as reflected in an increase to 19.67 in the total regulatory capital to risk weighted assets ratio as at June 2019 from 18.45 per cent at the end of December 2018, far above the prudential benchmark of 8.0 per cent. The weighted average interest rate on deposits grew to 1.59 per cent at the end of June 2019 from 1.57 per cent at the end of December 2018. The weighted average lending rate fell marginally to 8.01 per cent from 8.11 per cent at the end of last year. Consequently, the spread between the average weighted interest rate on deposits and loans narrowed to 6.41 per cent during

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Eastern Caribbean Central Bank