Commercial banks saw an improvement in long-term arrears in the month of October, with a 1.2 percent decrease noted in the Central Bank’s Monthly Economic and Financial Developments (MEFD) report for October.
According to the report, the arrears were reduced by $7.4 million. It added that during October, banks wrote off about $14.2 million in bad loans and recovered approximately $4.9 million.
“Disaggregated by average age of delinquency, non-performing loans (NPLs) contracted by $13.2 million (3.0%) to $423.2 million, lowering the associated ratio by 23 basis points to 7.9% – with declines in the NPL rates for consumer loans by 30 basis points to 6.5%; mortgages, by 13 basis points to 10.1% and commercial loans, by 32 basis points to 4.9%,” the report explained.
“In contrast, short-term arrears (31-90 days) grew by $5.8 million (2.9%) to $206.4 million, with the corresponding ratio higher by 11 basis points at 3.8%.
“A breakdown by loan type revealed that mortgage arrears contracted by $6.9 million (1.8%) to $385.6 million, attributed to reductions in both the non-accruals and short-term segments, by $4.2 million (1.6%) and by $2.7 million (2.0%), respectively.”
The report added that consumer loan delinquencies declined by $0.7 million or 0.4 percent to $183.7.
It noted that commercial arrears increased by $0.2 million or 0.4 percent to $60.3 million due to a $2.9 million increase in short-term arrears, “which overshadowed the $2.7 million (5.6%) decline in the long-term component”.
“In line with these developments, banks reduced their total provisions for loan losses by $41.8 million (9.7%) to $387.7 million in October,” the report said.
“Consequently, the ratio of total provisions to arrears narrowed by 5.9 percentage points to 61.6%.
“Further, the ratio for total provisions to NPLs declined by 6.8 percentage points to 91.6%.”