The Bank of Jamaica (BOJ), has issued a positive outlook for the island's deposit taking institutions.
In its just released 2017 annual report the Central Bank said with the stable economy, the low interest rate regime and sustained demand for credit, deposit taking institutions are expected to continue to perform positively in terms of profitability, funding profile and real growth in loans over the short- to medium-term.
However, it says the proliferation of non-traditional forms of credit by way of corporate bond issues in particular, may compel banks to become more aggressive in the credit market and relax certain underwriting and risk management standards.
This raises the possibility of higher residual credit risk.
Additionally, the increased use of IT-based and non-traditional delivery channels including agency banking could expose deposit taking institutions to increased levels of operational risk in the wake of increased fraud and cyber-attacks.
According to the Bank of Jamaica this may require higher financial outlay and thereby put downward pressure on profits.