Home' Trinidad and Tobago Guardian : May 9th 2013 Contents BG8 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt MAY 2013 • WEEK TWO
The weighted average lending rate
on commercial banks outstanding
loans was 8.75 per cent in Decem-
ber 2012 compared with 9.16 per
cent in December 2011, according
to the Central Bank of T&T s Monetary Policy
Report released on Tuesday.
Similarly, the weighted average rate on new
loans granted declined to 9.23 per cent in January
2013 from 9.49 per cent in January 2012.
"Deposit rates trended downwards, with the
weighted average deposit rate declining further
to 0.57 per cent in December 2012, from 0.61
per cent in December 2011," the Central Bank
Lending by the consolidated financial system
to the private sector remained weak in spite of
lower interest rates, the report said. On a year-
over-year basis, private sector credit grew by
2.1 per cent in December 2012, slower than the
3.4 per cent in January 2012 and 3.7 per cent
in the corresponding period of 2011.
"Among the major categories of consolidated
private sector credit, lending to consumers con-
tinued to grow, but at a relatively slow pace,"
the Central Bank said. Consumer loans granted
by the commercial banks slowed to 2 per cent
in December 2012, from 2.7 per cent in January
2012. In December 2012, the banks reported
slower growth in lending for the purchase of
furniture and furnishings, education and bridging
"The relatively low credit demand coupled
with high fiscal injections led to a considerable
accumulation of excess liquidity in the financial
system since October 2012," the Central Bank
said. "The Central Bank took steps to reduce
the excess liquidity via the conduct of open
market operations which absorbed $270 million
from the financial system. In addition, sales of
foreign exchange by the Central Bank to author-
ized dealers also helped to remove an additional
$4,843.2 million. To contain excess liquidity,
the Bank also rolled over $1.5 billion in maturing
commercial banks fixed deposits in March 2013.
The high levels of liquidity have resulted in no
activity in the inter-bank market. As well, the
repo window has not been accessed since June
2011," the report said.
The presence of high excess liquidity in the
financial system has contributed to short-term
interest rates remaining at record low levels
throughout 2012 and into the first four month
The report also covered trading activity in
the local foreign exchange market. The Central
Bank said trading was relatively stronger in 2012,
when compared with 2011. Sales of foreign cur-
rency by the authorised dealers in the market
(which are the commercial banks and the non-
banks financial institutions) to the public
amounted to US$6,713.7 million in 2012 which
was 8.5 per cent higher than the amount sold
in the prior year. Reports by dealers on sales in
excess of US$50,000 suggest that the demand
for foreign exchange was mainly concentrated
in the retail and distribution (29.9 per cent)
sector of the economy.
In addition, the manufacturing (13.8 per cent),
automobile (7 per cent), financial institutions2
(6.4 per cent), and telecommunications (5.6 per
cent) sectors as well as borrowing via interna-
tional credit cards (17.8 per cent) accounted for
significant shares of total foreign exchange sold
to the public, the Central Bank said.
Meanwhile, purchases of foreign exchange
from the public (except from the Central Bank)
by the authorised dealers amounted to
US$4,859.1 million in 2012, just 2.5 per cent
higher than in 2011.
Stock market cap up
After a sluggish start in 2012, the domestic
stock market gained momentum during the
year. The Composite Price Index (CPI) retreated
by 0.1 per cent in the first quarter of 2012 but
pushed upwards in the second quarter and con-
tinued to do so in the latter half of the year, the
report said. At the end of 2012, the CPI was up
by 5.1 per cent from the end of 2011. The Con-
glomerate, Manufacturing I and Trading sub-
indices also delivered gains during 2012, while
the remaining four sub-indices fluctuated during
the period. Trading activity remained relatively
low during 2012, with a total of 50.7 million
shares exchanging hands compared to 564.13
million shares traded in the previous year.
"Thus far in 2013, the stock market has pushed
ahead," the Central Bank said.
At the end of March 2013, the CPI was up
2.9 per cent from the end of December 2012,
in contrast to the 0.1 per cent decline in the
same period one year ago. Similarly, the All
T&T Index (ATI) continued to advance, recording
a gain of 4.1 per cent at the end of March 2013.
The Cross Listed Index started 2013 on a dis-
mal note, falling by 1.2 per cent during the same
"This downward trend in the Cross Listed
Index may be a reflection of the ongoing eco-
nomic challenges faced in Jamaica and the recent
national debt exchange programme which would
have impacted the profitability of the cross listed
Jamaican companies holding government debt
in their portfolios," the Central Bank said.
"Nevertheless, given the performance of the
overall market, stock market capitalisation rose
to approximately $100 billion at the end of the
first quarter from $97.4 billion at the end of
Trading activity in the domestic stock market
saw a pickup in the first quarter of 2013 too,
the Central Bank said. A total of 16.5 million
shares exchanged hands during the quarter with
a combined market value of $247.7 million,
compared with 13.9 million shares traded in the
comparative period in 2012. Trading was heavily
concentrated in the non-banking sub-
sector,which accounted for 48.6 per cent of the
total shares traded during the quarter.
Primary activity on the domestic bond mar-
ket was relatively subdued in 2012, the report
said. For the year, there were 13 bond issues
with a combined face value of $4.5 billion com-
pared with 20 issues in 2011 ($7.2 billion). The
public sector was once again the main borrower
on the market, accounting for 11 of the 13 pri-
mary issues in 2012.
So far in 2013, there were two primary bond
issues, raising in total $800 million. The Home
Mortgage Bank came to the market in January,
issuing a $200 million, ten-year bond with a
floating coupon rate initially set at 2.05 per
cent. In the following month, the T&T Mort-
gage Finance Company (TTMF) raised $600
million in 20 series with maturities ranging
from six months to ten years, and coupons
from 1.58 per cent to 5.47 per cent.
TT dollar mutual funds growing
In 2012, the size of the mutual funds industry
was boosted by high levels of liquidity in the
domestic financial system which continued
into the first quarter of 2013, the Central Bank
said. Following a modest increase of 3.2 per
cent in 2011, aggregate mutual funds under
management rose by 8.0 per cent in 2012 to
During 2012, the industry attracted net sales
of $2,030.3 million, compared with $729.5 mil-
lion in the previous year. Both equity and
income funds under management expanded
in 2012, with the former increasing by a robust
13.4 per cent and the latter by 7.0 per cent.
Foreign currency mutual funds also grew
strongly, rising by 12.0 per cent in 2012, in
sharp contrast to a 3.0 per cent decline in 2011.
Meanwhile, TT dollar funds increased by 6.9
per cent compared with 5.0 per cent one year
In the first quarter of 2013, aggregate mutual
funds under management continued to grow
robustly, the Central Bank said. At the end of
March 2013, funds under management stood
at $40.5 billion, representing an increase of
2.0 per cent (year-on-year) and 9.1 per cent
from the end of December 2012.
During the first three months of 2013, the
industry attracted net sales of $7,766 million
compared with $325.4 million in the previous
quarter. Buoyed by capital gains and increased
net sales, the Central Bank said, both equity
and income funds under management con-
tinued to expand during the first quarter of
"Consistent with the favorable performance
recorded in the domestic stock market, equity
funds under management expanded by 5.2 per
cent (quarter-on-quarter), reaching $4.7 billion
at the end of March 2013.
Meanwhile, income funds under manage-
ment grew by 1.4 per cent in the first quarter
to $35.2 billion on account of higher net sales,"
the report said. In terms of currency profile,
foreign currency denominated funds declined
after outpacing TT dollar denominated funds
for three consecutive quarters.
During the first three months of 2013, foreign
currency funds declined by 0.8 per cent (quar-
ter-on-quarter), while TT dollar denominated
funds rose 2.5 per cent.
The Central Bank has maintained its eco-
nomic growth forecast for T&T at 2.5 per cent
Governor Jwala Rambarran said he has cut
out the practice of giving inflation forecasts.
Banks' lending rates decline
Links Archive May 8th 2013 May 10th 2013 Navigation Previous Page Next Page