The Banking Executive Magazine - June 2025 Issue

Bahrain’s Financial Sector Bahrain’s Financial Sector DEMONSTRATES STRONG GROWTH Bahrain's financial sector is demon- strating strong growth and resilience, underpinned by expanding money supply, increased lending, and booming digital transactions. This positive outlook was highlighted during the Central Bank of Bahrain’s (CBB) board of directors’ third meet- ing for 2025, held and chaired by Hassan Al Jalahma. The board reviewed key develop- ments and the CBB’s strategic priori- ties presented by Governor Khalid Humaidan. Discussions also covered the CBB’s licensing activities, poli- cies, and achievements for 2025 thus far. The latest ‘Key Monetary and Bank- ing Indicators for June 2025,’ with data primarily current as of April 2025, paints a robust picture of the kingdom’s financial landscape. The total number of licensed institu- tions in Bahrain reached 368 by the end of April 2025. This includes 83 banks – comprising 15 Islamic banks, 29 retail banks, and 54 wholesale banks – with non-banking financial institutions accounting for the remaining 279 licensees. The overall banking sector balance sheet expanded to $244.7 billion at the end of April 2025, a 2.3 per cent increase from April 2024. Retail banking’s balance sheet saw a 4.7pc growth to $113.7bn, while wholesale banks registered a 0.3pc increase, reaching $131bn. Money supply indicators show healthy expansion. M3, the broadest measure of money supply, rose by 5.2pc to BD16.8bn by the end of April 2025 compared to April 2024. M2 also increased by 3.9pc to BD14.9bn. However, currency in cir- culation saw a slight dip of 1.5pc to BD696.7 million. Private sector de- posits, specifically non-bank de- posits, climbed to BD14.4bn, marking a 3.5pc increase from April 2024. The outstanding balance of total loans and credit facilities extended to resident economic sectors reached BD12.4bn at the end of April 2025, an increase of 1.8pc compared to April 2024. The ‘Personal Sector’ ac- counted for 48.9pc of total loans and credit facilities, while the ‘Business Sector’ represented 43.3pc. Personal loans, the largest share, stood at BD6.05bn, reflecting a 3.4pc year- on-year growth. Business loans reached BD5.3bn, growing by 1.3pc. Conversely, general government loans decreased by 4pc to BD962.4m. Bahrain’s financial soundness indica- tors for Q1 2025 remain robust. The capital adequacy ratio was a strong 20.6pc, and the non-performing loan ratio remained low at 2.7pc. Liquid assets stood at 25.7pc, with specific provisioning for non-performing loans at 53.7pc. The kingdom’s digital payment plat- forms are experiencing significant growth. Point-of-Sale (POS) transac- tions up to April 2025 reached a value of BD1.7bn, a substantial 14.9pc increase from April 2024. The number of transactions also surged by 24.1pc to 81.5m. The Electronic Funds Transfer System demonstrated considerable activity, with Fawri+ transactions totalling BD3.1bn (10.1pc increase), Fawateer at BD414.1m (11.3pc increase), and Fawri at BD8.7bn (9.8pc increase) up to April 2025 compared to April 2024. The total net asset value (NAV) of Collective Investment Undertakings (CIUs) reached $11.3bn as of the end of Q1 2025, despite a 2.44pc de- crease from Q1 2024. The number of CIUs grew by 2.24pc to 1737. No- tably, the NAV of Sharia-compliant CIUs saw a significant surge of 14.97pc to $2bn. The insurance sector showed robust performance in Q3 2024, with total gross premiums reaching BD239.4m, a 10.1pc increase from Q3 2023. General insurance business con- tributed 91pc of total gross premi- ums, while medical insurance accounted for 34pc. Bahrain’s balance of payments indi- cators for the end of 2024 indicate a healthy surplus. The trade balance recorded a surplus of BD1.35bn, and the current account posted a surplus of BD858m. As for the Bahrain Bourse, as of the end of April 2025, market capitalisa- tion stood at BD7.4bn, a 7.6pc de- crease compared to April 2024. The Bahrain All Share Index also saw a negative movement of 5.8pc com- pared to the end of April 2024. ISSUE 198 JUNE 2025 the BANKING EXECUTIVE 39