Fewer consumer delinquencies have led to a decline in total loan arrears across commercial lenders, reflecting an improvement in the non-performing segment of local credit, according to the most recent data from the Central Bank of The Bahamas.
The Monthly Economic and Financial Development (MEFD) report for November showed that total private sector arrears narrowed by $1.3 million to $697.6 million, with the accompanying ratio to total private sector loans unchanged at 12.2 percent.
“An analysis by loan category showed that the decline in total arrears was led by consumer delinquencies, which fell by $8.1 million (3.9 percent) to $198.0 million, due to respective decreases of $6.3 million (7.6 percent) and $1.8 million (1.5 percent) in both the short-term and long-term segments,” the report noted.
This improvement was, however, offset by a rise in arrears of the 31-90 day category which saw an increase of 3.4 percent or $7.7 million.
Nevertheless, mortgage arrears also lessened in November, by $3.5 million, to settle at $418.7 million.
“In this environment, banks decreased their total provisions for loan losses by $14.2 million (3.2 percent) to $435.5 million, which led to a 1.9 percentage point decline in its corresponding ratio to total arrears to 62.4 percent. Further, the ratio of provisions to NPLs (nonperforming loans) narrowed by 1.2 percentage points to 94.1 percent,” the report noted.
“In comparison to November 2018, the total private sector arrears rate decreased by 1.8 percentage points, as both the NPL and short-term rates moved lower by 1.0 and 0.8 percentage points, respectively. By major loan category, mortgages, commercial and consumer delinquency rates reduced by 2.5, 1.6 and 1.1 percentage points, respectively.”
Still, banks wrote-off an estimated $4.2 million during the review period, the Central Bank noted.
Mortgage arrears lessened in November