The financial sector of the Maldives displayed continued strength and stability in the fourth quarter of 2024, according to the latest Quarterly Economic Bulletin released by the Maldives Monetary Authority (MMA).
The banking sector remained notably resilient, reporting robust capital adequacy and healthy profitability. The sector’s total assets increased by 4%, reaching MVR 95.1 billion by the end of the quarter, largely driven by a 6% growth in deposits, spurred by foreign currency inflows from peak tourism activities. Treasury bills made up the largest portion of the asset base, comprising 24% of the total, followed by cash and bank balances (10%) and overnight deposit facilities (6%).
Banks maintained a strong Risk-Based Capital (RBC) ratio of 54%, significantly above the minimum regulatory requirement of 12%. The leverage ratio also remained comfortably above regulatory thresholds at 20%. Liquidity levels were high, with liquid assets making up 42% of total assets.
However, total lending saw a 3% decline compared to the previous quarter, primarily due to the settlement of loan facilities associated with a bank undergoing a winding-up process. Despite this contraction, non-performing loans (NPLs) remained steady, with an NPL ratio stable at 4%. Banks increased loan-loss provisions to 114% of non-performing loans, reflecting cautious risk management practices.
Profits for banks increased by 5% year-on-year, recording an after-tax profit of MVR 3.4 billion by the end of 2024. Net interest income saw an 11% rise, offsetting a decline in non-interest income and a moderate increase in provision expenses. Return on assets (ROA) remained stable at 3.7%, though return on equity (ROE) declined slightly from 15.3% in 2023 to 14.4%.
Finance companies also reported stable performance, with total assets reaching MVR 4.0 billion, marking a 1% quarterly increase. Gross loans from finance companies grew modestly by 3% annually. Profitability showed significant improvement, with annual pre-tax profits increasing by 19% to reach MVR 152.8 million by year-end, driven by lower provisioning expenses and increased non-interest income. The return on assets (ROA) and return on equity (ROE) improved notably to 3.2% and 6.0% respectively.
In the insurance sector, robust growth was recorded, with gross written premiums rising by 22% to reach MVR 1.9 billion for the year. The growth was predominantly driven by substantial increases in aviation, health, and fire insurance segments. Insurance companies maintained strong capital positions, with total assets rising to MVR 3.5 billion—a 29% annual increase. Investments formed a substantial part of the asset base, amounting to MVR 1 billion, dominated by debt securities and equity instruments.
The insurance sector also achieved significant improvements in profitability metrics, with net profits after tax reaching MVR 152.7 million. Notably, the health insurance segment recovered markedly, significantly improving its loss ratio due to strategic restructuring, reducing from 92% in 2023 to 72% by the end of 2024.
Overall, the robust financial performance of Maldives’ banking and insurance sectors underscores resilience amid fluctuating global economic conditions, indicating strong foundations and effective risk management in the domestic financial market.
