Caribbean banks have increased their capital and grown assets – but may not escape fallout from collapse in tourism on region.

A region typically dependent on tourism, the Caribbean is set to suffer a double punch from the coronavirus pandemic.

Countries in the region are not only dealing with the threat to citizens’ health but have been left with the economic burden of empty holiday resorts that typically cater to international visitors. Even if international restrictions are eased at some point in the near future, analysts expect one side effect to be a long-lasting aversion to travel on the part of consumers, to the detriment of the tourism industry.

The implications of this dreadful combination for the Caribbean are summed up in recent forecasts by the Inter-American Development Bank (IDB). The organisation calculates how many people will likely be left out of work in three different scenarios of economic recovery for the whole of the Latin America and Caribbean region.

Worst-hit trio

In the worst case – that of a protracted recession – about a quarter of workers in the Bahamas, Belize and Jamaica would lose their jobs, with respective drops in employment of 26.9%, 25.6% and 24.8%.

These are the highest ratios across the Latin American region and even in the most hopeful scenario, which supposes a fast return to growth, the trio are worst hit, with job losses of at least 9% each.

Other countries in the Caribbean are also set to see substantial parts of the population left out of work. In the IDB worse case scenario, Guyana, Suriname and Trinidad and Tobago could see job losses of up to 16.7%, 14.5% and 10.5% respectively. 

Naturally, the banking sector will also suffer and though banks in the Caribbean Community (Caricom) entered 2020 in relatively good shape, the crisis may harm even the most solid.

Regional integration

Formed by 20 countries, Caricom is set to foster regional integration. More than two-thirds of the area’s largest banks have increased their Tier 1 capital, mirroring the growth in assets in many cases.

CIBC FirstCaribbean International Bank tops the regional ranking with $1.08bn of Tier 1 capital. The bank, owned by Canadian Imperial Bank of Commerce, is based in Barbados and has climbed up from second place in 2019’s ranking.

The top spot at the time was occupied by RBC Financial Caribbean, the regional holding group of Royal Bank of Canada. The holding does not feature in the most recent table because RBC disclosed information at country, rather than holding, level for the 2019 financial year.

This year’s second and third largest names, Trinidad and Tobago’s Republic Financial Holdings and First Citizens Bank, have also improved their standing and moved up from their previous third and sixth place, respectively.

Performance indicators

Other names come to the fore when considering performance indicators rather than size. These indicators consider asset growth as well as asset quality along with profitability and risk ratios, among others. Guyanese banks Demerara Bank and Citizens Bank Guyana take first and second place respectively in the overall performance ranking, followed by RBC Finco of the Bahamas. The overall performance ranking amalgamates banks’ scores from the other more specific tables.

Demerara Bank scores particularly well in its asset quality and operational efficiency metrics, where it has the best and second-best scores, respectively, of all its regional peers. RBC Finco’s top performance in the soundness analysis is also noteworthy. This indicator looks at the capital-to-assets ratio and its annual change. RBC Finco also topped the ranking by leverage, as expressed by the total liabilities-to-assets ratio and its annual change.

Butterfield Bank Group is the fastest growing among the 30 largest Caricom names, while Bermuda Commercial Bank is the most liquid. Scotiabank Guyana is the best performing for profitability and return on risk, while Scotiabank Belize topped the operational efficiency table. 

Banks from the Dominican Republic, a relatively large market in the Caribbean, are not included in the Caricom ranking because the country is not a member of the group.

Caricom ranking



The Banker magazine’s global and regional rankings are industry-standard measures of bank size by Tier 1 capital. While the current rankings include some additional data to give an overall impression of bank performance, they use only a fraction of the very detailed analysis undertaken by our research team.

Knowing which bank is biggest, or has grown fastest, is useful but what we really want to know is “which bank is the best performer?” 

We have developed a model which scores and ranks banks in eight key performance categories, using 17 ratios, and assigns an overall best-performing bank score and ranking. 

The key requirement of the model was that it could be used to identify the best performers in any sample group, be it an existing global, regional or country ranking, or custom peer group such as G-SIBS. 

The model only uses performance ratios, and year-on-year percentages and basis points (bps) changes, so the size of a bank has no influence on its best bank ranking position. 

The performance categories and indicators are: 

Growth - Annual percentage growth in assets, loans, deposits and operating income

Profitability - Return on assets, return on equity, profit margin, asset utilisation (and annual bps change in these ratios)

Operational efficiency - Cost income ratio (and annual bps change in these ratios)

Asset quality - Allowance for loan losses to gross total loans, non-performing loans, impairment charges to total operating income (and annual bps change in these ratios)

Return on risk - Return on risk-weighted assets (and annual bps change in this ratio)

Liquidity - Loans to assets ratio, loans to deposits ratio (and annual bps change in these ratios)

Soundness - Capital assets ratio (and annual bps change in this ratio)

Leverage - Total liabilities to total assets (and annual bps change in this ratio)

When the peer group data is imported the model assigns a score for each indicator based on the relative distribution of values. Thus a bank which significantly outperforms on a particular indicator will receive a proportionately higher score. The maximum possible score for each category is 10 points and the maximum overall score is 80 points.

The model is neutrally weighted so that the underlying ratios and annual bps changes are of equal significance. Each performance category receives equal weighting. We plan to produce an online version of the benchmarking tool which will allow users to assign data point and category weights according to their own preferences.


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