Central Bank: Loan arrears up; $110.5M wrote off in 2020

The Central Bank of The Bahamas. FILE

Loan arrears grew by 12.6 percent ($86.7 million), in the private sector during 2020, the result of the lingering impact of COVID-19 on the economy.

Data in the Central Bank’s Monthly Economic and Financial Developments (MEFD) report for December shows that banks wrote off an estimated $110.5 million in claims and recovered approximately $23.3 million in 2020.

While there was some improvement in credit quality, by 2.9 percent, during December, credit quality remained weak for the entirety of 2020.

“The outcome was led by a $66.2 million (28.5 percent) growth in short-term delinquencies, with the relevant ratio higher by 1.2 percentage points. Similarly, non-performing exposures rose by $20.6 million (4.5 percent),” the MEFD report states.

Mortgage arrears led the increase, by just about 15 percent or $63 million.

“Likewise, consumer delinquencies rose by $30.2 million (15.2 percent), reflective of a $30 million (25.9 percent) growth in non-accrual loans and a $0.2 million (0.2 percent) uptick in the short-term component,” the report highlights.

“In contrast, commercial arrears declined by $6.4 million (9.9 percent), as the $9.1 million (18.2 percent) reduction in long-term arrears overshadowed the $2.7 million (18.4 percent) rise in short-term delinquencies.”

Also, at the end of 2020, Bahamian dollar credit was down by more than $275 million, as banks saw a falloff in mortgages and consumer credit by approximately $85 million.

This trend continued straight through to the end of the year, as the CBOB reported that private sector credit for December was down by $8.4 million, mortgages were down by $3.3 million and consumer credit was down by $13.5 million. It reflected the continued burden of the COVID-19 pandemic and ensuing joblessness on the sector.

“The falloff in credit to the private sector tapered to $8.4 million, from $21.3 million last year, as the decrease in mortgages and consumer credit narrowed to $3.3 million and $13.5 million, respectively, from $15.6 million and $14.3 million in the preceding year. Further, the growth in commercial credit moderated to $8.4 million from $8.6 million a year earlier. Meanwhile, credit to public corporations was relatively flat, after a $1.4 million decline last year,” the MEFD report states.

“On a yearly basis, total Bahamian dollar credit fell by $275.3 million, a reversal from $18.5 million growth in 2019. Contributing to this development, net claims on the government contracted by $206.3 million, contrasting with a $28.9 million expansion in the previous year. In addition, credit to the private sector reduced by $66.7 million, following an $8.3 million increase in the previous year. Underlying this outturn, the falloff in mortgages and consumer credit quickened, to $43.7 million and $41.4 million, respectively, from $27.6 million and $39.7 million in the prior year. Meanwhile, the rise in commercial credit moderated to $18.4 million, from $75.6 million last year. In a partial offset, the decrease in credit to public corporations slowed notably to $2.3 million, from $18.6 million in 2019.”

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Paige McCartney

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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