BTN News: The Central Bank of the Dominican Republic (BCRD) recently released its comprehensive assessment of the financial system for the first half of 2024, highlighting significant growth in assets and robust capitalization across the sector. As of June 2024, the net assets of the financial system experienced a remarkable increase of DOP 365.7 billion compared to June 2023, marking an 11.2% year-over-year growth. This surge in assets outpaced the growth in liabilities, which rose by 10.1%, amounting to DOP 293.5 billion. This positive trend reflects the underlying strength and resilience of the Dominican financial system amid a fluctuating global economic environment.
In an article published through Página Abierta by the BCRD’s Department of Financial Regulation and Stability, the central bank noted that private sector credit in the national currency grew by 15.2% annually as of July 2024. This steady growth aligns closely with the nominal expansion of the economy, which hovers around 9% per year. The BCRD attributes the increase in financial system assets primarily to a substantial rise in the net worth of financial institutions. The net worth grew by DOP 72.2 billion, reflecting a 19.6% increase from the previous year, almost doubling the growth rate of both assets and liabilities. This accelerated capital expansion strengthens the protection of depositors and contributes to overall financial stability in the Dominican Republic.
As of March 2024, the regulatory solvency ratio stood at 17.6%, significantly exceeding the minimum required threshold of 10%. The system maintained excess capital reserves of DOP 174.9 billion, ensuring sufficient solvency even in adverse economic scenarios. Furthermore, the credit portfolio quality remains high, with a delinquency rate of just 1.3%. The system recorded a net credit growth of DOP 297 billion, indicating that both productive sectors and households are effectively managing their financial obligations. Adequate provisions are in place to absorb any potential credit losses, further enhancing the system’s resilience.
In 2023, the Central Bank implemented liquidity measures, directing DOP 198.8 billion in loans at competitive rates to productive sectors, households, and micro, small, and medium-sized enterprises (MSMEs), with a particular focus on low-cost housing. These initiatives have significantly contributed to the financial system’s stability, ensuring continued access to credit and supporting economic growth across various sectors.
The financial sector’s profitability has also seen notable improvements. In the first half of 2024, profits grew by 11.2% year-over-year, reaching DOP 43.7 billion. The return on equity (ROE) was 24.9%, while the return on assets (ROA) stood at 3.0%, underscoring the sector’s strong performance and efficient management. The Central Bank continues to pursue financial inclusion initiatives, such as revising the Banking Subagents Regulation to facilitate access to financial products in remote areas. The 2023 National Survey on Financial Inclusion and Education revealed an increase in banking penetration, with 55% of adults using at least one financial product.
Overall, the Dominican financial system demonstrates remarkable stability and adaptability, positioning itself favorably despite an uncertain international economic environment. The Central Bank remains committed to closely monitoring financial markets and implementing measures to maintain macroeconomic stability and keep inflation within the target range. This proactive approach ensures that the financial system remains robust, capable of supporting the country’s economic growth, and resilient in the face of potential challenges.
