Manama, Kingdom of Bahrain – 10 October 2021 – The Central Bank of Bahrain’s (CBB) Board of Directors held its fourth meeting for the year 2021, chaired by Mr. Hassan Khalifa Al-Jalahma on Sunday, 10 October 2021.
The Board reviewed the developments in the financial sector for the third quarter of 2021 including the report on key economic, monetary, and banking indicators. Money supply M3 reached around BD 14.6 billion at end of August 2021. Retail banks’ private sector deposits reached BD12.7 billion at the end of August 2021. The total loans and credit to resident economic sectors amounted to BD10.8 billion at the end of August 2021 compared to BD10.6 billion at the end of May 2021, an increase of 1.1%, with business loans accounting for 50.6%, and personal loans representing 45.4% of total loans and credit facilities.
Point of Sales (POS) data showed increase in the number of transactions during the last three months (June-August 2021), totaling 30.7 million transactions (65.9% contactless), an increase of 51.9% compared to the same period in 2020. The total value of POS transactions in Bahrain totaled BD753.5 million (39.8% contactless), an increase of 35.0% compared with the same period in 2020.
The banking sector maintained a high level of capital adequacy and liquidity, as the capital adequacy ratio of the banking sector reached 18.8% in the second quarter of 2021 compared with 18.5% in the first quarter of 2021, which is higher than the minimum regulatory requirements of 12.5%. The capital adequacy ratio for the various banking sectors in the second quarter of 2021 was 20.5% for conventional retail banks, 17.6% for conventional wholesale banks, 21.6% for Islamic retail banks, and 16.4% for Islamic wholesale banks.
These indicators reflect the rebound in economic activities in the Kingdom of Bahrain with real economic growth of 5.7% in the second quarter of 2021 compared to the same period of 2020. The financial sector represented 17.3% of total GDP.
The Board was also briefed on the CBB’s initiatives of the 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 in the paper checks.
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. The Board also reviewed plans to introduce digital solutions for Motor insurance.
The Board expressed its appreciation and satisfaction to the rebound of economic activities in recent months, which came as a result of HM King Hamad bin Isa Al Khalifa patronage and directives to take all the measures to safeguard the Bahraini citizens and economic sectors from the Covid 19 pandemic which the Government of Bahrain headed by HRH Prince Salman bin Hamad Al Khalifa, the Crown Prince has worked diligently to implement through the financial support package provided over the last 19 months to contain the pandemic.