The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau hotel industry endured “a relatively weak” first two months of 2016, the Central Bank revealed yesterday, with total room revenues down 9 per cent year-over-year.

Ever-optimistic, the regulator’s March report on monthly economic developments suggested that the sector’s performance would “improve in the near term”, due to the Bahamas hosting a number of international events this year.

Still, the seeming temporary downturn in the Bahamas’ number one industry, and greatest employer, is likely to raise fresh concerns about the health of the economy and its competitiveness.

“Preliminary data from the Bahamas Hotel & Tourism Association and the Ministry of Tourism indicated that the tourism sector’s performance was relatively weak over the first two months of the year, as total room revenue for a sample of hotels in New Providence decreased by 9 per cent,” the Central Bank said.

“Reflecting this development, the average occupancy rate contracted by 2.3 percentage points to 68.2 per cent, and the average daily room rate fell by 7.2 per cent ($19.42) to $248.69.

“There is potential for near-term improvement in the sector, as the hosting of a number of international events during the second quarter of the year, should provide impetus to the key stopover segment of the visitor market.”

Elsewhere, the 2016 first quarter produced a relatively modest improvement in the commercial banking sector’s massive pile of delinquent loans, which declined slightly to just under $1.2 billion.

“Banks’ credit quality indicators showed broad-based improvements over the first quarter, as private sector loan arrears fell by $21.6 million (1.8 per cent) to $1.198 billion, and by 30 basis points to 20 per cent of total loans,” the Central Bank said.

“This outturn was led by a $20.8 million (6.6 per cent) fall-off in the short-term component to $292.2 million, with the corresponding ratio of arrears to total loans decreasing by 33 basis points to 4.9 per cent.

“The non-performing segment softened by $0.9 million (0.1 per cent) to $905.8 million, although the attendant arrears to loans ratio rose by 3 basis points to 15.1 per cent.”

Mortgages account for $684 million, or 57.1 per cent, of the banking industry’s total bad credit.

These “fell by $12.6 million (1.8 per cent), owing to a $10.5 million (2 per cent) contraction in the non-performing category, and a $2.2 million (1.2 per cent) decrease in the short-term segment,” the Central Bank said.

“Similarly, consumer arrears decreased by $11.3 million (3.8 per cent), amid respective declines in both the short and long-term components of $6.2 million (6.5 per cent) and $5.1 million (2.5 per cent).

“In contrast, a $14.7 million (8 per cent) hike in the non-performing category, which exceeded the $12.4 million (30.7 per cent) fall-off in short-term delinquencies, led to commercial arrears increasing by $2.3 million (1 per cent).”

Still, Bahamian commercial banks wrote-off $13.8 million worth of bad loans during the 2016 first quarter, while recovering $6.2 million.

“Despite the improvement in credit quality, banks maintained their conservative risk stance by raising their total provisions for loan losses by $12.7 million (2.4 per cent) to $543.1 million,” the Central Bank added.

“As a result, the coverage ratios of provisions to total arrears and non-performing loans advanced by 1.9 and 1.5 percentage points to 45.3 per cent and 60 per cent, respectively.”

Total Bahamian dollar credit extended during the 2016 first quarter contracted by $48.2 million, shrinking at a lesser rate than the $59.4 million decline in the same period in 2015.

“The reduction in private sector credit narrowed by over one half to $19.6 million, from $41.7 million a year ago, as mortgages were relatively flat compared to a $24.1 million decline in the prior period,” the Central Bank said, “and the fall-off in consumer credit tapered to $13.3 million from $17.6 million in 2015.

“However, commercial loans, which were unchanged in the previous year, fell by $6.2 million over the quarter. “