The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Total commercial bank loan arrears breached the $1.4 billion mark at end-August 2014, the Central Bank of the Bahamas has revealed, with almost 23 per cent of all outstanding credit now in default.

The regulator, in its report in monthly economic and financial developments for August, said loan arrears were once again on the increase, rising by $44.6 million or 3.3 per cent during the month.

Credit defaults, the Central Bank added, now account for 22.9 per cent of all outstanding credit, with short-term delinquencies (loans between 31 and 90 days past due) growing by $23.3 million or 7.1 per cent during the month to reach $352.3 million.

That figure is equivalent to 5.8 per cent of outstanding loans but, of more concern, non-performing loans (those more than 90 days past due) also increased by $21.3 million or 2.1 per cent to $1.049 billion.

This means non-performing loans, upon which the banks have stopped accruing interest, are now equivalent to 17.1 per cent of outstanding credit. This translates into more than $1 out of every $6 lent being in default.

August, though, is often a bad month for loan repayments, Some borrowers miss payments because they were away on vacation, or used what was due to pay for the vacation, while others are ‘maxed out’ on Back to School shopping.

The increase in ‘bad loans’ was led by mortgages, where $22.9 million worth of credit fell into arrears, taking the total to $704.6 million. There was an increase of $15.9 million, or 9 per cent, in mortgage credit between 31-90 days past due, and a $7 million or 1.4 per cent increase in the 31-90 days past due category.

Commercial loan arrears rose by $12.5 million or 3.4 per cent to hit $377.4 million, with the increase caused by a $14.2 million or 4.7 per cent hike in credit more than 90 days past due. Consumer loans in default also increased by $9.2 million or 3 per cent to $319.4 million.

Bahamian commercial banks increased their loan loss provisions by $12.5 million or 2.2 per cent to $588.6 million, taking their ratio to non-performing loans to 56.1 per cent.

Some $9 million worth of bad loans were written off, while the commercial banks recovered $4 million.