Bahrain's financial landscape shows resilience with growth in banking and insurance

TDT | Manama                                                    

The Daily Tribune – www.newsofbahrain.com

Bahrain’s financial sector continues to exhibit stability and growth, with notable trends in money supply, private deposits, loans, and insurance premiums, according to the Central Bank of Bahrain.

This came during the third meeting of CBB this year chaired by Hassan Khalifa Al Jalahma. The meeting reviewed the performance report and developments in the financial sector for the third quarter of 2023.

The Board also reviewed key monetary and banking indicators for the previous months, which proved the stability of the banking sector despite the fluctuations in global financial markets due to the increase in interest rates and continued quantitative tightening.

As per the report, money supply surged to BD15.8 billion, representing a 3.8% increase compared to August 2022. Retail banks witnessed a substantial rise in total private deposits, reaching BD13.9 bn by April’s end, an impressive 3.1% uptick from the previous year.

Loans and credit

Furthermore, the outstanding balance of total loans and credit facilities directed towards resident economic sectors climbed to BD11.6 bn, showcasing a 1.8% expansion compared to August 2022.

The Business Sector accounted for 43.2% of this total, with the Personal Sector comprising 50.9% of these loans and credit facilities.

Banking system

Bahrain’s combined banking system, encompassing both retail and wholesale sector banks, recorded a balance sheet of $224.7 bn by the end of August. This figure reflects a 0.1% increase compared to the same time in 2022.

Digital transactions

The realm of digital transactions also displayed remarkable progress, with Point of Sales (POS) data revealing a 14.6% upsurge in the number of transactions during the first eight months of 2023, totalling 119.4 million transactions.

Of these, 77.6% were contactless payments. Moreover, the total value of POS transactions in Bahrain during the same period reached BD 2.7 bn, with 50.9% of these being contactless transactions, indicating a 7.6% increase from 2022.

Capital adequacy and liquidity in the banking sector remain robust, as the capital adequacy ratio stood at 19.3% in Q2 2023. Various banking sectors displayed strong ratios, with conventional retail banks at 21.7%, conventional wholesale banks at 17.0%, Islamic retail banks at 21.4%, and Islamic wholesale banks at 17.2%.

Collective Investment

Meanwhile, Bahrain’s Collective Investment Undertakings (CIUs) numbered 1667 as of the end of September, with a total net asset value (NAV) of $10.7 billion in Q2 2023, marking a 9.3% decrease from Q2 2022.

Shari’a-compliant CIUs, however, exhibited an increase, with their NAV growing by 16.7% from Q2 2022 to Q2 2023.

Insurance sector

In the insurance sector, gross premiums in the domestic market totaled BD151.5 million in the first six months of 2023, with general insurance, including medical insurance, contributing significantly.

Notably, total gross premiums of the Medical insurance rose from BD46.78 million in the six months ended June 30, 2022, to BD52.31 million in the same period of 2023, showing an increase of around 12%.

Medical insurance is the largest in terms of total gross premiums, which represented around 35% of the total gross premiums written in the period ending June 30. Motor insurance, the second-largest class, recorded an 8% increase in premiums, reaching BD38.89 million during the same period.

Life insurance and savings products, categorized as long-term insurance, generated BD15.90 million in premiums, representing 10% of the total gross premiums written in Bahrain’s insurance market in the first half of 2023.

During the meeting, the board extending their appreciation to Rasheed bin Mohammed Al Maraj for his fruitful efforts during his tenure as Governor of CBB. The board further congratulated Khalid bin Ebrahim Humaidan on obtaining the royal trust in appointing him as Governor of CBB.