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January sees dip in loan delinquencies

Private sector loan arrears reached the lowest rate they have been in a decade this past January, as banks experienced fewer mortgage and consumer loan delinquencies.

This improvement in credit quality is reflective of ongoing gains in the economy, according to the Central Bank of The Bahamas (CBOB) Monthly Economic and Financial Developments (MEFD) report.

“Specifically, total private sector arrears decreased by $10.7 million (1.3 percent), to $799.1 million, and ratio to total private sector loans contracted by 18 basis points to 14.1 percent — the lowest rate in 10 years,” the MEFD noted.

“The reduction was due mainly to an $18.6 million (6.4 percent) decline in short-term arrears (31 to 90 days) to $274.3 million, while the corresponding ratio fell by 32 basis points to 4.8 percent. In a partial offset, non-performing loans (NPLs), firmed by $7.9 million (1.5 percent) to $524.9 million and by 14 basis points, to 9.2 percent of total private sector loans.”

When broken down by loan type, the MEFD showed that a 3.2 percent contraction in mortgage delinquencies contributed the most to the overall decrease in arrears.

This while consumer loan arrears experienced a more modest softening by 0.3 percent.

“Disaggregated by loan type, the overall decrease in arrears was mainly attributed to a $15.7 million (3.2 percent) contraction in mortgage delinquencies to $483.7 million, as both the short and long-term components fell by $9.4 million (5.7 percent) and $6.4 million (1.9 percent), respectively,” the report said.

“In addition, consumer loan arrears softened by $0.7 million (0.3 percent) to $228.6 million, as the 31 to 90-day segment decreased by $8.4 million (8.8 percent), in contrast to the $7.7 million (5.8 percent) rise in NPLs. In contrast, the commercial component rose by $5.7 million (7.0 percent), due to a $6.6 million (13.7 percent) rise in long-term delinquencies, which overshadowed the $0.8 million (2.5 percent) falloff in short-term arrears.”

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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