The Central Bank (BCRD) has announced a continued downward trend in interest rates across multiple banks during the first quarter of 2025, El Caribe reports. Despite a challenging global economic landscape, the nation’s financial system maintains robust indicators, according to a recent BCRD analysis.
The report, titled “Strength and Resilience of the Dominican Financial System in a Complex, Turbulent, and Uncertain International Environment,” revealed that the weighted average interest rate on loans issued by multiple banks stood at 14.77% at the close of March 2025. This represents a significant decrease of 132 basis points compared to November 2024, when the rate reached 16.09%.
This decline is attributed to measures implemented by the BCRD and the Monetary Board in the final quarter of 2024 and the beginning of 2025, coupled with a cumulative reduction of 125 basis points in the monetary policy rate since last September.
The analysis further detailed that interest rates for loans to productive sectors fell to 13.56% in March 2025, a 95 basis point decrease from the 14.51% recorded in November 2024. Consumer loans also saw a reduction, reaching an average interest rate of 20.45%, down 106 basis points from the 21.51% registered in November.
The Central Bank emphasized that “lower interest rates and the sustained dynamism of loans have contributed to maintaining healthy financial indicators of credit quality, profitability, and solvency at the close of March 2025.” The non-performing loan ratio stood at a low 1.6%, indicating RD$1.6 in delinquent loans for every RD$100 in outstanding loans. Furthermore, the financial system maintained a coverage ratio of 185.4% for these overdue loans, meaning RD$1.85 in provisions for each RD$1.0 of past-due credit.
Regarding profitability, the financial system demonstrated a return on equity (ROE) of 22.2% and a return on assets (ROA) of 2.7% for March. These levels have allowed the system to generate sufficient profits to maintain comfortable levels of liquidity and capital. Data from the Superintendency of Banks indicated a regulatory solvency ratio of 17.57% as of February 2025, well above the 10% minimum required by the Monetary and Financial Law No. 183-02, signifying a capital surplus of RD$191.26 billion.
The BCRD analysis also highlighted a substantial increase in the financial system’s net assets, reaching RD$3.9 trillion by the end of March 2025. This represents a year-on-year growth of RD$371.33 billion, or 10.5%, aligning with the nominal growth of the Dominican economy.
The most significant growth areas within assets were the loan portfolio and liquid assets, which saw year-on-year increases of RD$209.79 billion (10.8%) and RD$112.37 billion (21.3%), respectively. The proportion of multiple banks’ assets held abroad remained low at just 3.0% of total assets, approximately RD$105 billion.
The Central Bank reiterated that this positive evolution of banking assets reflects the liquidity-enhancing measures it implemented along with the Monetary Board, including the redemption of Central Bank letters and notes amounting to around RD$173 billion. The Monetary Board also approved the release of RD$35.35 billion from the legal reserve requirement (1.75% of reservable liabilities) to support affordable housing acquisition and construction, general housing purchases up to RD$15 million, and financing for MSMEs through specialized microfinance entities. To date, approximately RD$16 billion, or 45.2% of the approved amount, has been disbursed from this legal reserve measure, benefiting 2,901 individuals.
The BCRD emphasized that the financial system’s strength is also evident in the sustained growth of public deposits and equity. Public deposits, representing holdings by businesses, families, and individuals, grew by RD$317.47 billion compared to March 2024, an annual increase of 10.2%, reaching a total of RD$3.4 trillion. This demonstrates the confidence of savers in the Dominican financial system. Paid-up capital and equity reserves also increased by RD$41.25 billion during the March 2024-2025 period, an annual expansion rate of 13.0%.
Read more in Spanish:
Central Bank
El Caribe
21 April 2025