Central Bank of The Bahamas officials revealed in their latest monthly economic and financial developments (MEFD) report that bank credit quality improved, although it was not across the board at all institutions.
According to the bank, total private sector loan arrears fell by $71.2 million or 5.8 per cent to $1,161.8 million with the corresponding ratio narrowing by 1.2 percentage point to 18.6 per cent of total loans.
By average age of delinquencies, those in the short term or the 31-90 day category decreased by $81 million or 19.9 per cent to $325.8 million, and the relevant ratio fell by 1.3 percentage points to 5.2 per cent.
In contrast, nonperforming loans—which consist of arrears exceeding 90 days and on which banks have stopped accruing interest—grew by $9.9 million or 1.2 per cent to $837 million, with a corresponding 14 basis point hike in the ratio of total loans, to 13.4 per cent.
“The decline in private sector arrears mainly reflected a $59.9 million 19.6 per cent reduction in commercial delinquencies, to $245.8 million, as the 31-90 day segment decreased by $58.3 million or 51.1 per cent and the non-performing component, by a smaller $1.5 million or 0.8 per cent,” the bank said.
“Lesser declines were reported for consumer and mortgage arrears, which fell by $8.5 million or 3.2 per cent and $2.8 million or 0.4 per cent, respectively, owing solely to reductions in short-term delinquencies, by $9.5 million 9.4 per cent and $13.3 million 6.9 per cent; however, the corresponding non-accrual segment firmed by $0.9 million or 0.6 per cent and $10.5 million or 2.2 per cent.”
Banks increased their loan loss provisions by $2.9 million or 0.9 per cent to $344.6 million during September, resulting in the ratio of provisions to total delinquencies rising by 2.0 percentage points to 29.6 per cent, while the corresponding ratio to non-accrual loans was broadly unchanged at 41.2 per cent.
Banks also wrote-off an estimated $24.4 million in loans during the review month, while recoveries amounted to $4.8 million.
For the month of September, total domestic foreign currency credit grew by $30.1 million, following the previous year’s $11.9 million expansion. Borrowing activity by one public corporation elevated credit to public corporations by $34.2 million, vis-à-vis an $8.7 million reduction last year, while the net claim on the government decreased marginally by $0.8 million, a reversal from a $1.2 million gain in 2011.
Foreign currency credit to the private sector fell by $3.4 million, after last year’s $2.0 million growth.
“The contraction in Bahamian dollar deposits accelerated by $98.5 million to $100.6 million, owing largely to a $38.2 million reduction in fixed balances, reversing the $23.1 million accumulation in the previous year,” the bank said.
“In addition, demand deposits declined by $64 million, more than double the $29.7 million contraction a year earlier; however, savings balances rose slightly by $1.7 million, after 2011’s gain of $4.6 million.
In interest rate developments, the weighted average deposit rate was marginally higher by four basis points at 1.84 per cent in September, with the highest rate of 5.25 per cent offered on fixed balances of 1 month and greater than 12 months. In contrast, the weighted average loan rate fell by 55 basis points to 10.90 per cent.”
