The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

COMMERCIAL bank loan arrears improved in February by $60.2m, with the most significant decline in mortgage arrears which, according to the Central Bank of the Bahamas, contracted by $39.2m.

In its monthly economic report for February, the Central Bank revealed that loan arrears for the commercial banks improved in February by $60.2m - or 4.8 per cent - and by a full percentage point to 20 per cent of total loans.

The regulator noted that  the short-term (31 to 90 days) segment was lower by $52.6m - or 17.5 per cent - at $247.6m and by 88 basis points to 4.1 per cent of total loans. Non-performing loans or arrears of more than 90 days narrowed by $7.5m to $953.9m.

“A breakdown of delinquencies by loan category situated the most significant decline in mortgage arrears, which contracted by $39.2 million, 5.6 per cent to $659.3 million, and was concentrated in the short-term component,” the report said. “Similarly, consumer arrears were lower by $14.1 million, 4.6 per cent at $292.6 million, primarily on account of the 31-90 day delinquencies, which fell by $12.4 million, 13.2 per cent.

“Commercial arrears, which decreased by $6.9 million, 2.7 per cent to $249.6 million, included a $4.7 million,12.6 per cent reduction in short-term arrears. Banks increased their total provisions for loan losses, by $14.0 million, 2.8 per cent to $507.8 million, which represented a higher 42.3 per cent of total arrears and 53.2 per cent of non-performing loans.

“During the month, loan write-offs aggregated $8.0 million and recoveries, $2.5 million.”

The regulator said that based on preliminary indicators the Bahamian economy maintained a “mild growth trajectory” in February, aided by an improving tourism sector and ongoing foreign investment led construction activity.

“Price developments featured some firming in average consumer prices in January, following the implementation of the new Value Added Tax (VAT) regime, which also boosted tax revenues. However, the overall fiscal deficit for the seven months, through January of fiscal year 2014/15, widened on account of higher spending,” the Central Bank said.