The financial sector, particularly the banking industry, is being urged by the Central Bank of The Bahamas to take more aggressive steps to reduce the delinquency rate. 

Central Bank Governor John Rolle explained in the bank’s latest quarterly report, that commercial banks must make its balance sheets stronger and faster before another recession happens. 

“The constrained lending environment is a continued reflection of the high rates of credit delinquencies from which commercial banks are recovering,” Mr. Rolle said. 

“The Central Bank is prompting these institutions to take more aggressive steps to reduce the delinquency rate, making their balance sheets stronger, much faster, before another recession happens.”

He added that this would include approaches that would recognize higher losses on loans that are in default and a look at the value of foreclosed mortgaged properties and take more persistent efforts in selling off repossessed properties.

“The Bahamian economy is expected to continue to grow over the next few years. The domestic banking sector will continue to experience high levels of liquidity and the foreign reserves of the Central Bank are expected to continue to increase at a mild pace,” Mr. Rolle said.

“When the medium-term credit delinquency rates are taken into account, the banking sector is only expected to begin to recover its total lending to the private sector at a gradual pace.” 

Mr. Rolle said with this, the Central Bank has made a decision to maintain its posture for private sector credit growth.

“Our posture, however, continues to assume sustainable outcomes in how large public and private sector financing operations are executed,” Mr. Rolle said. 

“For large scale transactions, either involving debt or equity operations, a prudent inclusion of foreign currency flows would be essential so as not to divert Bahamian credit from households and the smaller commercial borrowers.”

According to Mr. Rolle, some focus was placed on sustainability and Central Bank’s latest survey conducted with the private sector and local private businesses, which revealed varied feedback on how the economy performed in recent months.

“Most surveyed businesses noted higher cost in their operations, but stated that overall conditions for their operation were stable to improved in general,” he said. 

“The outlook held by most firms was for stable to further improved operating conditions over the remainder of 2019, with lowered inflation expectations and healthier employment outcomes than in the first half of 2019.”