Manama, Kingdom of Bahrain – 27 June 2021 – The Central Bank of Bahrain’s (CBB) Board of Directors held its third meeting for the year 2021, chaired by Mr. Hassan Khalifa Al-Jalahma on Sunday, 27 June 2021.
The Chairman and members of the Board of Directors expressed their thanks and appreciation to the Kingdom’s leadership for the appointment of Sh. Salman bin Isa Al Khalifa as Deputy Governor of CBB.
The Board reviewed the topics on the agenda including the CBB’s performance report and developments in the financial sector for the second quarter of 2021 and the CBB’s financial performance report as of end of June 2021, in addition to the directives issued to banks regarding postponing loan installments for individuals and companies as part of the efforts made by the Kingdom’s esteemed government through the recent financial aid package. The Board expressed their appreciation to the banks on their positive response to the postponement of loans for individuals and companies, as it will contribute to easing the citizens welfare during these unprecedented circumstances.
During the meeting, the board also reviewed the report on key economic, monetary and banking indicators for the year. The report indicated an increase in domestic liquidity at the end of May 2021 compared to the end of December 2020, as the money supply in its narrow sense M1 (cash in circulation + private sector deposits on demand in BD) increased by 5.1% when compared to end of December 2020, totaling BD 3,070.7 million at end of May 2021. In addition, M2 (M1 + private time and savings deposits) increased from BD12,840 million at end of December 2020 to BD13,382.8 million at the end of May 2021, an increase of 4.2%. Consequently, broad money supply M3 (M2 + government deposits) increased by 3.5% totaling BD14,638.9 million at end of May 2021.
The consumer price index recorded a decrease of 1.0% in April 2021 compared to April 2020, and a decrease of 1.5% compared to December 2020 to reach 96.3 points.
As for retail banks, total private deposits increased from BD12,247 million at the end of December 2020 to BD12,782.1 million at the end of May 2021, an increase of 4.4%. The report also indicated that the outstanding balance of total loans and credit facilities provided to resident economic sectors amounted to BD10,648.2 million at the end of May 2021 compared to BD10,413.8 million at the end of December 2020, an increase of 2.3%, with business loans accounting for 50.8%, and personal loans representing 45.0% of total loans and credit facilities.
Point of Sale (POS) data indicated an increase in the number of transactions during the first five months of 2021, totaling 45,305,246 transactions (60.3% of which were through contactless cards), an increase of 45.8% compared to the same period in 2020. The total value of POS transactions in Bahrain totaled BD1.2 billion (36.0% of which were through contactless cards), an increase of 27.3% compared to 2020.
The banking sector maintained a high level of capital adequacy and liquidity, as the capital adequacy ratio of the banking sector reached 18.5% in the first quarter of 2021 compared to 18.6% in the fourth quarter of 2020, which is higher than the minimum of 12.5% required by the CBB. The capital adequacy ratio for the various banking sectors in the first quarter of 2021 was 19.7% for conventional retail banks, 18.1% for conventional wholesale banks, 20.0% for Islamic retail banks, and 16.2% for Islamic wholesale banks.
As for the non-bank sector such as insurance and investment business, stable operations and performance was noted compared to previous periods.