As of the end of December 2021, total financial sector assets increased to ¢260.43 billion, about 59.1% of Gross Domestic Product.

This was from ¢213.35 billion (55.6% of GDP) at the end of December 2020.

According to the Financial Stability Review report, assets size growth was broad-based with the Securities Industry (excluding pension funds) recording the highest growth rate of 77.4%, a strong rebound after the contraction experienced in 2020.

The insurance and banking industries followed with a growth rate of 29.4% and 19.7% respectively, while the pensions sector grew by 18.2%.

Also, as of the end of December 2021, total financial assets to GDP increased by 3.5 percentage points to 59.1%.

The report attributed the growth in total assets to GDP in the review year to the benefits of the various cleanup reforms within the financial sector as well as the effective regulatory overview of the financial sector by the Financial Stability Council.

Exposure of banks to other financial institutions decline

Total exposures of banks to the other financial institutions amounted to ¢692.08 million at the end of December 2021, declining from ¢1.25 billion in the prior year.

Banks were exposed to the other financial institutions mainly in the form of investments and credit facilities (loans and overdraft).

Specifically, banks were largely exposed to the Securities Institutions (¢405.66 million), followed by the Specialised Deposit-Taking Institutions (SDIs) (ؓ237.49 million), the Insurance Companies (¢48.25 million) and the Pension Institutions (¢682,861.57).

The banks’ exposures to the securities industry, the report said, could affect the of the banking industry should there be fragilities in the sector.

Other Financial Institutions exposure to banks hits ¢4.43bn

Again, total exposure of Other Financial Institutions to banks at the end-December, 2021 was approximately ¢4.43 billion, higher than the ¢3.77 billion recorded at the end-December 2020. Majority of these exposures were in the form of deposits and investments.

At the end of 2021, insurance institutions were the most exposed (¢1.3 billion), followed by SDIs (¢1.13 billion), Securities institutions (¢1.1 billion) and pensions companies (¢934.60 million).

These exposures, the report stressed, highlight the potential for contagion risk from banks to other financial institutions.

Similarly, Other Financial Institutions were also comparatively more exposed to banks, as banks are the primary financial intermediaries.

On net basis, Other Financial Institutions had a claim of ¢3.74 billion on banks at the end-December 2021, higher than the net claim of ¢2.52 billion recorded at the end-December 2020.

This implies that Other Financial Institutions continue to be more exposed to banks, relative to the banks’ exposures to Other Financial Institutions (OFI).

The net claims of other financial institutions are disaggregated as follows: Insurance institutions (¢1.25 billion); Pensions’ institutions (¢933.92 million); SDIs (¢890.33 million); and the securities’ institutions (¢666.02 million).