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BANKING & FINANCE
Banks in Brunei
Brunei Darussalam’s banking system is
characterised by a dual system made
up of Islamic and conventional banks,
as well as an Islamic trust fund set up
under its own statute.
According to the Brunei Darussalam
Central Bank’s (BDCB) first semi-annual
policy statement released in July 2022,
the banking industry continues to
have a robust capital position with an
aggregate Capital Adequacy Ratio of
20.9 per cent as of Q1 2022.
While the global inflation forecast
is expected to remain elevated and
disruptions on global supply chains
are likely to persist in the near-term,
the BDCB expects its impacts on the
Sultanate’s overall inflation to be low,
given the tightening of Monetary
Authority
of
Singapore’s
(MAS)
monetary policy thrice so far in the
first seven months of the year. BDCB’s
inflation forecast for 2022 is expected to
be between two to three per cent.
The BDCB recorded growth in the
financial sector total assets of 7.9 per
cent year-on-year with total asset value
of BND23.9 billion as of Q1 of 2022.
Also as of Q1 2022, the Islamic finance
sector held 58 per cent with BND13.9
billion, while deposit-taking institutions
made up 92 per cent of the total
financial sector assets with an asset
base of BND22 billion.
BDCB noted that the International
Monetary Fund (IMF) has revised down
its 2022 global growth forecast from4.4
to 3.6 per cent due to spillover effects
from Russia’s invasion of Ukraine, such
as supply shocks and higher inflation.
Meanwhile, the domestic economy
contracted by 1.6 per cent in 2021.
Profitability of the banking industry
has also declined due to heightened
uncertainties associated with the
pandemic and relatively low global
interest/profit rates environment.
The temporary regulatory flexibility
to banks and finance companies in
Brunei ceased after June 30, 2022 as
restrictions were lifted and businesses
as well as individuals started to recover
from the impact of the pandemic.
To further ensure that the financial
sector’s critical infrastructure meets
international
standards,
BDCB
issued Guidelines on Technology Risk
Management and Guidelines on IT Third
Party Risk Management to all financial
institutions, in line with the Financial
Sector Blueprint’s (2016-2025) strategic
goal under Pillar III.
BDCB also issued a notice on Academic
Qualification and Work Experience
Requirement forCapitalMarketsServices
Representative’s Licence (CMSRL) to
improve the level of professionalism
within the financial sector, and a
notice on the application process and
requirements
of
investment-linked
insurance business for insurance
companies to enhance the governance
of this business undertaking.
The
ASEAN+3
Macroeconomic
Research Outlook (AMRO) in its April
2022 publication also said Brunei’s
banks continue to be well capitalised,
with ample liquidity and reasonable
profitability.