Credit demand up nearly 10 percent over the first six months

Credit demand up nearly 10 percent over the first six months

NASSAU, BAHAMAS — Credit demand increased by nearly 10 percent in the first six months of the year, according to the Central Bank’s latest data. 

The regulator in its quarterly bank lending conditions survey report noted that the latest survey of commercial banks signaled an improvement in bank lending conditions and credit demand in the first six months of 2023—when compared to the same period in 2022—evidenced by a rise in total applications received, particularly for consumer loans. 

It also noted, however, that the rate of approval on loan applications decreased during the first half of the review year vis-à-vis the six-month period ending June 2022. Moreover, during the review period, leading reasons cited for denials at lending institutions for personal applications, were high debt service ratio (DSR), no collateral, insufficient time on the job, and underemployment.

During the first six months, applications received totalled 15,899 up 9.4 percent from the six months to June 2022.  The number of applications approved totaled 11,954, up 3.6 percent from June 2022.  Loan denials totaled 2,450, up from 1,403 denials in  June 2022. 

During the six months to June 2023, banks processed 1,104 mortgage applications, of which residential mortgage requests represented 96.4 percent of the total.

Total mortgage applications contracted by 8.8 percent, year-on-year, attributed to a decline in credit requests for existing dwellings by 12 percent and new construction by 13.8 percent. Meanwhile, gains of 2.2 percent were registered for rehabilitations & additions.

“Approximately 32.2 percent of mortgages were approved in the six months to June 2023, indicative of a 1.4 percentage points decrease relative to the same period in the prior year. A breakdown by structure revealed 56.8 percent of applications against existing dwellings projects were successful, while 36.6 percent and 8.3 percent of the requested financing against new construction and renovations, respectively, were approved,” the regulator said.

Banks received 524 commercial credit applications over the first half of 2023, a 1.5 percent decrease from the previous year, owing to lower demand from the New Providence market.