Economic resurgence gathering momentum

MANAMA: Bahrain’s economic resurgence has gathered momentum, show the latest key economic, monetary and banking indicators issued by the Central Bank of Bahrain (CBB).

The loans portfolio in Bahrain’s banking system saw an increase of 1.1 per cent amounting to BD10.8 billion as of end-August 2021, when compared with BD10.6bn as of end-May 2021, with business loans accounting for 50.6pc and personal loans taking 49.4pc share of total loans and credit facilities during the period.

Reviewing data during this year’s fourth board meeting of the CBB, chairman Hassan Al Jalahma expressed satisfaction with the rebound of economic activities in recent months, which came as a result of government measures, including the financial support package, to help Bahrainis and the economy overcome the effects of the Covid-19 pandemic over the last 19 months.

Money supply (M3) reached around BD14.6bn as of end-August 2021.

The broadest measure of money supply, M3 includes money in circulation plus deposits in banks, plus savings deposits and money market mutual funds, plus large time deposits in banks.

Retail banks’ private sector deposits reached BD12.7bn as of end-August 2021.

Point of sale (POS) data showed increase in the number of transactions during the three months from June to August 2021, totalling 30.7 million transactions (65.9pc contactless), an increase of 51.9pc compared with the same period in 2020.

The total value of POS transactions in Bahrain totalled BD753.5m (39.8pc contactless), an increase of 35pc compared with the same period in 2020.

The banking sector maintained a high level of capital adequacy and liquidity, as the capital adequacy ratio reached 18.8pc in the second quarter of 2021 compared with 18.5pc in the first quarter of 2021, which is higher than the minimum regulatory requirement of 12.5pc.

The capital adequacy ratio for the various banking sectors in the second quarter of 2021 was 20.5pc for conventional retail banks, 17.6pc for conventional wholesale banks, 21.6pc for Islamic retail banks and 16.4pc for Islamic wholesale banks.

These indicators reflect the rebound in economic activities in the kingdom with real economic growth of 5.7pc in the second quarter of 2021 compared with the same period of 2020.

The financial sector represented 17.3pc of total GDP.

The board was also briefed on the CBB’s initiatives of digital transformation in the financial sector, which included the eKYC project, and CBB is working to cover all licensed financial institutions in the eKYC project.

The new e-cheque, which will be launched later this month should facilitate the cheque settlement process.

This service will have same legal and financial features as paper cheques.

The board also reviewed the plan for the development of payment and settlement systems in the kingdom, in particular the expansion of contactless payment channels as well as plans to introduce digital solutions for motor insurance.



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