Jamaican DTIs Profits Tumble 19.2% in 2024

• Deposit-taking institutions (DTIs) recorded a 19.2% decline in pre-tax profits to J$42.2Bn in 2024, a sharp reversal from the 16.1% growth in the previous year, as modest growth of 5.7% in operating income was fully offset by a similar rise in operating expenses.
• The increase in income was primarily driven by a 14.9% rise in interest income from loans, advances and discounts, but this was eroded by higher interest expenses on deposits—reflecting the tighter liquidity environment, more competitive deposit rates—as well as increased provisioning for loan and security losses amid ongoing credit and interest rate uncertainty.
• As a result of the weaker earnings performance, key profitability indicators deteriorated, with return on equity falling by 5.3 percentage points to 11.9% and return on assets declining by 0.7 percentage points to 1.5%, mainly due to a significant drop in net profit margins.
• Despite the downturn in profitability, the DTI sector remained adequately capitalized and solvent at end-2024, as the capital adequacy ratio held steady at 14.6, with all institutions maintaining capital levels above the statutory minimum of 10.0%, supported by Tier 1 capital injections, net issuances, reserve transfers and proportionate growth in risk-weighted assets.
• Liquidity positions remained strong but softened relative to the prior year, as the JMD-Only Liquidity Coverage Ratio declined by 14.1% to 176.4%, reflecting stronger growth in net cash outflows compared to high-quality liquid asset holdings, with fair value losses on these assets also linked to the persistently high interest rate environment.

(Source: Bank of Jamaica)