Challenges
The international monetary watchdog called for improved bank supervision and more involvement in risk management by top commercial bank management.
"Although near-term risks to banking system stability appear manageable, challenges remain," the IMF said in a new assessment of the island's financial system stability.
It warned that recent tightening of monetary policy to combat inflation, resulting in a higher interest rate environment, is likely to adversely affect the profitability of finance companies and banks with largely fixed-rate assets.
Banks have so far managed to mitigate this by demanding increased spreads between deposit and lending rates.
But load deposit ratios had deteriorated indicating higher funding of loans off mone