Profit-drop headline
Jamaica’s deposit-taking institutions (DTIs) watched pre-tax earnings shrink by 19.2 per cent to J$42.2 billion in 2024—even as their loan books grew—according to the Bank of Jamaica’s new Financial Stability Report. boj.org.jm
The rising cost of cash
Behind the slump is a brutal fight for deposits. With domestic liquidity tight for most of the year, banks bid up retail rates, pushing interest expense sharply higher and neutralising the 14.9 per cent bump in interest income. boj.org.jm
Trading floors go quiet
Non-interest revenue—traditionally the shock-absorber for Jamaican lenders—collapsed 54.5 per cent as institutions dumped higher-risk GOJ global bonds and parked surplus funds in low-yield, short-tenor repo paper. boj.org.jm
Credit quality under a magnifying glass
Past-due loans edged up 3.1 per cent, driven by stretched consumers wrestling with still-elevated borrowing costs and Beryl-related food-price spikes. Mortgage delinquencies remained “relatively elevated,” although the overall coverage ratio stayed well above prudential minimums. boj.org.jmboj.org.jm
A household-heavy balance sheet
Household exposures now command 55.6 per cent of all DTI loans—an ever-larger single-risk bucket. That concentration, coupled with the rise in variable-rate mortgages, keeps management and regulators on edge. boj.org.jm
Return metrics shrink
Return on equity slid five full points to 11.9 per cent, while household debt climbed to 26.4 per cent of GDP—meaning there’s less headroom for additional leverage on either side of the balance sheet. boj.org.jmboj.org.jm
Regulatory airbags deploy
BOJ stress tests show the sector could absorb a cocktail of rate spikes, FX depreciation and equity sell-offs with a post-shock CAR still above 13 per cent. A new Systemic Risk Buffer (0-2.5 per cent of RWAs, phased in from 2025) will add another layer of loss-absorption for the biggest lenders, but may also slow credit expansion.
Cyber—the fastest-growing tail-risk
Internet-banking fraud incidents ran at nine times their pre-pandemic pace over 2019-23, prompting the central bank to impose tougher cyber-risk standards. boj.org.jm
Climate punches too
Hurricane Beryl dealt an estimated J$32.2 billion (1.1 % of GDP) blow to the economy. General insurers swallowed only J$65 million in net losses, but BOJ will subject banks and insurers to climate stress tests in 2025. boj.org.jm
Orderly failure planning
A Special Resolution Regime now before Parliament introduces bail-ins—forcing shareholders and unsecured creditors to take losses before public funds are touched. boj.org.jm
Outlook: margins on a diet
Governor Richard Byles warns that any global inflation flare-up could freeze or reverse recent rate cuts, putting another squeeze on funding spreads just as banks confront higher capital charges, cyber defences, and climate modelling costs. For now, capital is ample—but the cushion is getting noticeably thinner.
