The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Central Bank revealed yesterday that the reduction in external reserve balances for November slowed by over $77.8m from 2022, reflective of net foreign currency outflows through the private sector.

The regulator’s monthly economic report maintained that the Bahamian economy will sustain its growth momentum, albeit at a “moderated pace” with indicators moving closer to their expected medium-term trajectory.

“During the review month, the reduction in external reserves slowed to $30.6m from $108.4m in the preceding year, for an ending balance of $2,463.4m,” the Central Bank said.

“Underpinning this development, the Central Bank’s foreign currency transactions with the public sector reversed to a net intake of $17.0m, from a net sale of $53.5m in the preceding year.

“Further, the Central Bank’s net foreign currency sales to commercial banks moderated to $48.9m, from $61.9m in the previous year. In addition, commercial banks’ net outflows to their customers fell to $30.1m, lower than the net sale of $59.7m in 2022.”

The Central Bank forecasted that external reserves, although reduced, will stay above international benchmarks supported by the tourism and private sectors.

It said: “Further, notwithstanding some anticipated seasonal drawdowns over the remainder of the year, external reserve balances are forecasted to remain robust, staying above international benchmarks, supported by expected foreign currency inflows from tourism and other net private sector receipts.

“Consequently, external balances should remain more than adequate to maintain the Bahamian dollar currency peg.”

Foreign currency outflows related to current account transactions decreased by $70.1m to $538.7m compared to the same period in 2022. Credit and debit card transactions declined by $53.4m, outflows for oil imports reduced by $26.4m, transfer payments by $8.1m and factor income payments by $2.3m. Foreign currency sales for non-oil imports increased by $19.6 m and travel related transactions by $0.5 m.

As for the credit quality of the commercial banking system, Central Bank said the quality indicators were “incrementally improved” with an increase of $0.3m or 0.1 percent in November. As a portion of total outstanding credit, loans in arrears fell by 4 basis points to 10 percent of the total.

The Central Bank reported declines in non-performing mortgages by 6 basis points to 8.8 percent, consumer loans by 14 basis points to 4.9 percent and commercial loans by 14 basis points to 4.7 percent.

It said: “An analysis by average age of delinquency revealed that the short-term segment (31-90 days) grew by $4.9m (2.7percent) to $183.1m, with the associated ratio firming by 7 basis points to 3.4percent.

“In contrast, nonperforming loans (NPLs) declined by $4.6m (1.3percent) to $361.7m, resulting in a narrowing in the accompanying ratio by 11 basis points to 6.6 percent—with reductions in NPL rates for consumer loans, by 14 basis points to 4.9percent; commercial loans, by 14 basis points to 4.7percent; and mortgages, by 6 basis points to 8.8 percent.

“A disaggregation by loan type showed that the uptick in total delinquencies was owing primarily to a rise in mortgage arrears, which rose by $8.4m (2.5 percent) to $343.2m, underpinned by an increase in the short-term component, by $10.0m (8.7percent), which overshadowed the $1.6m (0.7percent) decline in non-accrual loans.

“Providing some offset, consumer arrears fell by $5.1m (3.3 percent) to $150.0m, on account of reductions in both the short and long-term categories, by $2.8m (5.0 percent) and by $2.3m (2.3 percent), respectively. Further, commercial loan delinquencies decreased by $3.0m (5.5 percent) to $51.7m, as short-term arrears fell by $2.3m (33.3 percent) and NPLs by $0.7m (1.5 percent).”