Downes positive about 2020 economic outlook | THE DAILY HERALD

Derek Downes

~ De-risking a challenge for Caribbean banks ~

 PHILIPSBURG–St. Maarten Bankers Association President Derek Downes is positive about the outlook of the economy for this year and believes that for the short term more focus is needed on issues such as bringing Princess Juliana International Airport (PJIA) to full capacity.

  Downes was responding at the time to questions on the banking and the economy from The Daily Herald.

  In giving an insight into how he believes the economy will perform this year, Downes said: “I believe that 2020 will record further growth as the island’s hotel-room inventory increases, the airport expands its capacity and recovery projects are further executed. The construction of the [new St. Maarten General – Ed.] Hospital has commenced and this should also help to boost the economy.” 

  He said the local economy had recorded growth last year as the island continued to rebuild after Hurricane Irma and the rebuilding process boosted the economy. “There’s much greater interest being shown in home ownership, whether through building or purchasing, and the banks have been assisting clients with generous mortgage loan campaigns, offering up to 100 per cent financing in some cases,” Downes noted.

  Asked what were his suggestions for a better-performing economy, he said: “In the short term, focus needs to be put on bringing the airport to full capacity and continuing with the reconstruction/recovery of the island. Over the medium to long term, attention could be placed on boosting personal and business income by reducing direct taxes and introducing indirect taxation to widen the tax base. This will encourage consumer spending, generate economic activity and increase government revenue.”

  On the issue of current trends in personal banking/loans and commercial banking/loans, he said the latest Central Bank for Curaçao and St. Maarten (CBCS) statistics confirm that personal loans are increasing, while business loans have declined.

  “There’s an uptick in home ownership, as all banks have introduced mortgage and loan campaigns with low interest rates which have allowed for more persons to acquire or build a home, purchase land, a car, and borrow for other personal expenses.”

  Downes was also asked to weigh in on the consolidation occurring in the banking industry with some banks closing multiple branches and some being sold. He said unfortunately this is a global trend, as banks try to reduce cost, become more efficient and offer more services through more digital channels.

  As for challenges being faced by the banking industry, he said the major challenge facing Caribbean banks in particular continues to be de-risking. “This has led banks to increase their AML/CFT [anti-money-laundering/countering financing of terrorism – Ed.] compliance framework in an effort to not only satisfy the regulator, but also to maintain their correspondent banking relationships, which is crucial.”

  He said also that banks also face the increasing threat of cyber criminals and have spent significant amounts on ensuring that their cyber-security protocols are strong and up-to-date to safeguard their clients’ information and funds.

  “There’s the changing needs of customers, especially those who prefer to do banking digitally. Banks in St. Maarten have responded by introducing digital branches, mobile banking and improving their online banking platforms,” Downes noted.

Source: The Daily Herald