Banking sector arrears continue downward trend

Banking sector arrears continue downward trend
Central Bank (photo courtesy of the Central Bank)

NASSAU, BAHAMAS – Banking sector arrears continued to trend downward during the month of October with total private sector arrears contracting by 6.8 percent, according to the Central Bank.

The regulator in its Monthly Economic and Financial Developments report for October 2019 stated: “Banking sector arrears continued to trend downward during October, with total private sector arrears contracting by $50.8 million, 6.8 percent to $698.9 million, and the corresponding ratio declining by 94 basis points to 12.3 per cent of total private sector loans. In particular, short term arrears (31-90 days) reduced by $44.1 million or 16.3 per cent to $227.1 million, and its relevant ratio fell by 79 basis points to 4 percent.”

The Central Bank also noted that non-performing loans (NPLs) contracted by $6.7 million or 1.4 percent to $471.8 million, yielding a 15 basis points decrease in the attendant ratio to 8.3 percent.

“Disaggregated by loan category, the contraction in arrears was led by a $34.4 million fall-off in mortgage delinquencies to $422.2 million,” the bank stated.

“Both the short-term and long-term categories declined, by $27.0 million or 18 percent and $7.4 million or 2.4 percent respectively. Similarly, consumer loan arrears reduced, by $21.2 million, 9.3 percent to $206.1 million, owing to reductions of $20.7 million or 20 percent and $0.5 million in the short-term and long-term segments.”

It continued: “In contrast, commercial arrears rose by $4.9 million or 7.4 percent to $70.6 million, due to a $3.6 million or 22.3 percent increase in short-term arrears and a $1.2 million or 2.5 percent uptick in nonaccrual loans.”

According to the Central Bank, during the review period the reduction in Bahamian dollar deposits narrowed to $8.0 million, from $49.5 million in the corresponding period of 2018.

“Underlying this outcome, savings and demand balances grew by $20.2 million and $10.0 million, rebounding from the prior year’s retrenchment of $15.7 million and $40.0 million, respectively,” the regulator noted.

“In contrast, fixed deposits contracted by $38.2 million, after the $5.3 million expansion recorded last year. Further, the falloff in residents’ foreign currency deposits tapered to $21.6 million from $90.3 million a year ago.”

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