St. Kitts and Nevis (WINN); The ratio of non-performing or bad loans across banks in the Eastern Caribbean Currency Union has decreased over the past few years but is still more than double the internationally accepted level.
Speaking at a Nevis Chamber of Industry luncheon on Wednesday (May 17) at Oualie Beach, Governor of the Eastern Caribbean Central Bank Timothy Antoine gave an update on developments in the banking sector, reiterating that while banks are well capitalized the main risk remains the high level of non-performing loans
“The high non-performing loans, at the moment that ratio is around 11.8 percent. What does that mean? For ever loan in the system- 12% per bank. Now you will say that things happen, and things do, but you understand the problem- if you have too many bad loans, all the policies are put at risk, and that’s the concern.
“Now the good news is that from a high of 18.3 percent in 2013, it is trending down and it is now down to under 12 percent, but the international benchmark is 5 percent.”
The Eastern Caribbean dollar has been pegged at $2.7 to US$1 since 1976 and that rate has helped to maintain low inflation while facilitating growth in the financial sector
“I want to report this afternoon that our currency is strong, how strong- 97.4 percent in terms of our backing. What does that mean? It means for every one EC dollar in circulation we have 97.4 cents in foreign reserves, mainly U.S foreign reserves that back our currency. What does the law require? The law requires sixty percent, and that is a credit to our Currency Union and the fact that regional arrangements can work.”