With many economies depending on tourism, 2020 proved particularly difficult for the Caribbean as international travel all but came to a halt because of the Covid-19 pandemic. The region’s gross domestic product contracted by 8.6% in 2020, according to the World Bank. This, naturally, put local banks to the test. Most of the largest Caribbean lenders suffered financially, with pre-tax profits shrinking rapidly and a few names incurring a loss. The region’s top two banks by Tier 1 capital, Puerto Rico’s Popular and First BanCorp, saw a drop of nearly a quarter and more than half of their pre-tax profits values of the previous year, respectively; while RBC Financial Caribbean, the region’s third-largest lender, went into the red.
On the other hand, Caribbean banks held Tier 1 capital generally steady; some even expanded this measure and at a faster rate than the one at which assets grew. OFG BanCorp in Puerto Rico and National Commercial Bank Jamaica are the two largest examples.
