Published November 19, 2025 | CariCRIS LinkedIn
Understanding Asset Quality
A key measure of a country’s financial health is the Non-Performing Loans (NPL) ratio. This is the share of loans where borrowers have not paid principal or interest for more than 90 days. High NPL levels can affect the strength of the banking sector, reduce credit available to businesses and consumers, and weaken economic growth.
How NPLs Have Moved Over the Last 10 Years
Over the last 10 years, NPL levels across the Caribbean have slowly improved. In 2024, the NPL ratio in some jurisdictions declined to its lowest level in nearly a decade. Although still above internationally accepted benchmarks, this marks a gradual improvement across the region. The Caribbean’s exposure to tourism, construction, and other externally driven sectors continues to influence loan performance, given their vulnerability to global economic shifts, natural disasters, and climate-related events. Given the region’s structural vulnerabilities, global shocks such as the 2008 financial crisis, the COVID‑19 pandemic, and the Russia–Ukraine conflict weakened borrowers’ repayment capacity.
Varied reforms have been introduced to strengthen asset quality and reduce non-performing loans across the Caribbean, with several reforms implemented region-wide.
How Are Countries Responding?
Countries across the Caribbean have introduced various reforms to strengthen banks, reduce distressed loans, and improve how credit risks are managed. These measures aim to make the financial system more stable and resilient.
Examples of Reforms by Territory:
Jamaica: Enhanced provisioning, tightened collateral rules, strengthened credit information systems, and modernized insolvency laws.
Trinidad & Tobago: Focused on prudential regulation, MSME support, and improved supervisory oversight.
Eastern Caribbean Currency Union countries: The Eastern Caribbean Asset Management Corporation (ECAMC) manages distressed assets, stronger provisioning rules are enforced, and foreclosure and credit-reporting frameworks are being improved.
Belize and Guyana: Introduced secured transactions frameworks, credit bureaus, and stricter asset-classification and provisioning standards, alongside capital and risk-management enhancements.
These reforms aim to strengthen asset quality, improve credit-risk management, and build greater financial resilience.
Looking Ahead
These reforms take time to show full results. Financial regulators will continue monitoring how well these changes work over the coming months and years.
CariCRIS continues to monitor these developments closely and evaluate what they mean for financial stability and creditworthiness in the region.
Sources: Central Banks and financial regulatory authorities across the Caribbean, including Jamaica, Trinidad & Tobago, Barbados, the ECCU, Belize, and Suriname.