The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian economy remained “relatively flat” in September, the Central Bank of the Bahamas revealing yesterday that Nassau/Paradise Island hotel room revenues were down 7.4 per cent year-to-date for the first nine months of 2013.

Its report on monthly economic developments for September said: “Hotel earnings continued to decline in September, amid softness in the key group segment of the market, increased competition from other regional destinations and a modest decline in airlift capacity.

“Based on preliminary information, from a sample of large hotels in New Providence and Paradise Island, total room revenues decreased by 12.7 per cent in September from a year earlier, partly due to a contraction in room inventory at five hotel properties.”

The Central Bank added: “The average occupancy rate decreased by 5.5 percentage points to 40.9 per cent, while the average daily room rate (ADR) fell by 3.6 per cent to $149.99.

“Similar trends were noted over the nine-month to September period, as the 7.4 per cent reduction in total room revenues was occasioned by a 5.2 percentage point decline in room occupancy to 66.7 per cent, which outpaced the 2.7 per cent advance in the ADR to $239.50.”

The Central Bank said the weakness in stopover hotel arrivals meant the Bahamian economy “will continue to face headwinds over the remaining months of 2013”, with unemployment levels remaining high.

“Banks’ credit quality indicators weakened slightly in September, as total private sector loan arrears increased by $7 million (0.6 per cent) to $1.28 billion, and by 13 basis points to 20.8 per cent of total loans,” the Central Bank said.

“In terms of the average age of delinquencies, the short-term 31-90 day segment expanded by $16.6 million (4.1 per cent) to $423.6 million, resulting in a 27 basis point rise in the total arrears to loans ratio to 6.9 per cent.

“Conversely, non-performing loans - which consist of delinquencies exceeding 90 days, and on which banks have stopped accruing interest - fell by $9.6 million (1.1 per cent) to $856.5 million, and by 14 basis point to 13.9 per cent of total loans.”

The Central Bank added: “The growth in total arrears was concentrated in the mortgage segment, which firmed by $7.5 million (1.1 per cent) to $684.4 million, as the $15.6 million (8.9 per cent) expansion in 31-90 day delinquencies outpaced the $8.1 million (1.6 per cent) decrease in non-performing loans.

“A more modest increase was noted for consumer loan arrears of $1.0 million (0.4 per cent), owing primarily to a $1.2 million rise in the non-accrual component, which eclipsed the $0.3 million falloff in the 31-90 day category.

“In contrast, commercial loan arrears fell by $1.5 million (0.4 per cent), based on a $2.7 million (1.4 per cent) decline in the non-performing category, which offset the $1.3 million (0.9 per cent) gain in short-term delinquencies.”

Bahamian commercial banks also wrote-off an estimated $11 million in loans in September, and recovered $4.9 million in outstanding obligations.

Private sector credit growth during the month private sector fell to $2.2 million compared to $5.3 million a year earlier, led by slower growth in the mortgage component.

This dropped to $1.8 million relative to $5.7 million in September 2012. The Central Bank added: “Consumers continued to have a net repayment position, which strengthened to $5.5 million from $2.6 million in 2012.

“In a modest offset, the expansion in commercial and other loans improved to $5.8 million from a year-earlier $2.1 million. Meanwhile, credit to the rest of the public sector decreased by $1.9 million, following last year’s $1.4 million accretion.”