Economic and Financial Review - June 2019

June 2019 Economic and Financial Review ANGUILLA

($49.4m) decline in Anguilla’s imputed share of the ECCB’s reserves.

a contraction in their deposits at commercial banks.

An analysis of changes in the distribution of credit indicates that credit flows declined across most sectors. Most notably, credit to the personal sector contracted by 6.8 per cent ($23.0m), due to decreases in the stock of debt for house and land purchases (18.1 per cent), home construction and renovation (3.0 per cent) and other personal (10.1 per cent). Other notable declines in credit were recorded for government and statutory bodies (81.9 per cent), professional and other services (19.3 per cent), distributive trade (12.1 per cent) and transport (9.4 per cent). By contrast, credit flows increased for construction and land development (2.1 per cent) and manufacturing (1.8 per cent). The net foreign assets of the banking system grew by 15.5 per cent ($84.4m) to $629.2m, compared with growth of 8.2 per cent during the first half of 2018. The increase was primarily influenced by a 36.4 per cent ($133.8m) expansion in commercial banks’ net foreign assets, tempered by a 27.9 per cent

The liquidity situation in the commercial banking system improved during the review period, as banks continued to adopt a broadly risk averse stance as the economy recovered. Accordingly, the ratio of liquid assets to total deposits plus liquid liabilities rose by 1.4 percentage points to 56.5 per cent, while that for loans and advances to total deposits fell by 3.4 percentage points to 47.0 per cent, both falling within the stipulated ECCB guidelines. Additionally, banks remained well capitalised as indicated by the capital adequacy ratio of 15.7 per cent as at June 2019, well above the prudential benchmark of 8.0 per cent. However, the ratio declined by 2.8 percentage points from the 18.5 per cent mark recorded as at December 2018. The weighted average interest rate spread between loans and deposits declined marginally by 0.2 of a percentage point to 7.3 per cent, compared with a spread of 7.4 per cent as at December 2018. The reduction in the interest rate spread was mainly attributable to a larger increase in the weighted average deposit rate (0.2 of a

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Eastern Caribbean Central Bank