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Consumer credit continues decline

Bahamians are applying and being approved for fewer loans, continuing a downward trend in consumer credit.

In the latest Monthly Economic and Financial Developments (MEFD) Report for June, the Central Bank of The Bahamas (CBOB) indicated that private sector credit fell by $64.2 million during the first half of 2018, compared to $16.8 million decline last year this time.

Mortgages contracted by $5.1 million, while consumer credit declined by $40.4 million and commercial credit dropped by $18.7 million, the CBOB said.

This decline in lending continues despite an improvement in banks’ credit quality indicators which show that in June, total private sector arrears declined by 2.4 percent or $20.6 million, to $824.3 million, according to CBOB.

As a result, the ratio of arrears to total loans across commercial banks contracted 38 basis point to 14.4 percent.

“This outcome reflected a $16.4 million (5.6 percent) reduction in the short-term (31-90 day) segment to $277.0 million, resulting in a 29 basis point decline in the accompanying ratio to 4.9 percent,” the MEFD said.

“Similarly, non-performing loans (NPLs) decreased by $4.2 million (0.8 percent), to $547.3 million, and by 8 basis points to 9.6 percent of total private sector loans.”

The Central Bank’s analysis by loan type showed that the decline was spurred by a 2.9 percent reduction in mortgages, and another 8.1 percent fall off in short-term loans.

Non-performing loans also softened by 0.3 percent, CBOB said.

“Similarly, consumer arrears decreased by $6.3 million (2.5%), as both the short and long-term segments narrowed by $4.7 million (4.7%) and by $1.6 million (1.1%), respectively,” the MEFD said.

“Meanwhile, the commercial segment was unchanged, as the $1.7 million uptick in short-term arrears was offset by a decline of similar size in non-accruals.”

Paige McCartney

Business Reporter at The Nassau Guardian
Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas.
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News
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