Banks across the Caribbean have bounced back from a tough environment in 2020, which saw the regional economy contract by 12.8%, to register robust growth in 2021 across Tier 1 capital, assets and pre-tax profits.
Of the 10 countries represented in The Banker’s Top 30 Caribbean Banks 2022 ranking, only one — the Bahamas — saw its aggregate profits fall over the course of 2021, although this was by just 0.58%. Collectively, the cohort registered an impressive 129.3% surge in profits.
Total assets rose by 9.6%, with 80% of the banks in the ranking recording an increase in assets. Aggregate Tier 1 capital grew by 3.2%, with half of the banks expanding their core capital. The Dominican Republic, Bahamas and Haiti are the only countries to see a fall in Tier 1 capital during 2021.
With five lenders each, Jamaica and the Dominican Republic have the most institutions in the ranking; however, Puerto Rico is the region’s biggest banking market by assets, with a total of $106.5bn across four banks — more than double the assets of the Dominican Republic, the next largest sector.
The two largest banks by both assets and Tier 1 capital are Puerto Rican. Popular and First BanCorp have held onto first and second place, respectively, for the second year running. Popular recorded a 9.9% increase in Tier 1, extending its lead on its compatriot, as well as on third-placed RBC Financial Caribbean, based in Trinidad and Tobago, which topped the ranking in 2019.
Trinidad and Tobago’s Republic Financial Holdings and Barbados’s CIBC FirstCaribbean International Bank moved up the ranking, both with more than 11% increase in Tier 1 capital, pushing Banco Popular Dominicano, based in the Dominican Republic, down from fourth to sixth place.
However, it was Belize’s Caribbean Investment Holdings that saw the biggest leap in both Tier 1 capital and assets of 31.8% and 89.8%, respectively. The lender acquired Scotiabank’s Belize operations in 2021, following the Canadian bank’s decision to exit several markets in the region.
St Kitts–Nevis–Anguilla National Bank (National Bank), the dual-island nation’s only institution in the ranking, saw the largest surge — almost 600% — in pre-tax profits. It jumps into the 2022 ranking in 16th place, with $293m in Tier 1 capital. (It was not included in the 2021 ranking because the data was not available in time.)
Impressively, National Bank is also crowned the best-performing bank in the ranking, with the highest scores in profitability, operational efficiency, return on risk, soundness and leverage. This is a timely accolade for the lender, which celebrated 50 years of operating in the country in 2021. And while it placed third in the growth table, expansion is part of its ambitions, as illustrated by the announced acquisition of CIBC First Caribbean in St Kitts & Nevis in October.
Haiti’s private commercial lender, Unibank, has placed second in the overall best-performing bank table, with top marks in liquidity, as well as bettering many of its peers in profitability, operational efficiency and return on risk. While it increased its pre-tax profits by almost 200%, it was one of the few banks that experienced a contraction in Tier 1 capital during 2021.
First Citizens Bank, based in Trinidad and Tobago, is the third best performer, but takes second spot in the soundness and leverage tables. It is also looking to expand its operations in 2022 and is in the process of obtaining a banking licence to operate in Guyana, according to local reports.
The region’s biggest lenders, Popular and First BanCorp, place sixth and fifth, respectively, in the overall best-performing table. Notably, Popular has come first in asset quality, which takes into account non-performing loans and impairment charges to total operating income.
The Caribbean banking sector has responded well to the reversal of fortune in the region’s economy. And the economic upturn looks set to continue: the Caribbean Development Bank is projecting gross domestic product growth of 9.1% across its 19 borrowing member countries in 2022, accelerating the recovery that started in 2021.
