The Central Bank of The Bahamas (CBOB) reported in its September quarterly economic report (QER), which was released this week, that personal loans and both consumer and residential mortgages grew; with respect to mortgages in particular, the value of mortgages outstanding grew for the second straight year, to $3.3 billion.

The bank said that personal loans, which constituted the majority of Bahamian dollar private sector credit, increased by 0.5 percent, and that, underlying this outturn, both consumer and residential mortgages grew, outstripping the $1.7 million (2.9 percent) reduction in overdrafts.

Loans
A further breakdown of consumer loans, revealed growth in lending for miscellaneous purposes ($34.9 million), travel ($7.7 million), education ($5.9 million) and credit cards ($4.9 million), which contrasted with more muted gains of under $1 million for furnishings and domestic appliances and medical expenses.

In a partial offset, CBOB recorded net repayments for debt consolidation ($8.6 million), land purchases ($7.1 million), home improvements ($6.2 million) and private cars ($3.0 million), while declines of less than $1 million were recorded for taxis and rented cars, as well as commercial vehicles.

Among the other private sector credit components, net repayments were recorded for miscellaneous purposes ($10.8 million), distribution ($5.0 million), manufacturing ($4.8 million), tourism ($1.2 million), agriculture ($0.7 million) and professional and other services ($0.2 million).

"In contrast, credit for construction, entertainment and catering, fisheries and private financial institutions expanded, by $11.0 million, $5 million, $4.4 million and $3.4 million, respectively," the bank said.

Mortgages
The September QER found that conditions in the domestic real estate market remained relatively subdued over the review period, as data reported by banks, insurance companies and the Bahamas Mortgage Corporation showed the total value of mortgages outstanding firming by $11.1 million (0.3 percent) to $3,256.1 million, following a $7.1 million (0.2 percent) gain a year earlier.

Residential mortgages -- at 93.6 percent of the total -- increased by 0.8 percent to $3.05 billion. Commercial mortgages also grew by $8.8 million (4.4 percent), extending last year's $9.7 million (4.8 percent) expansion.

Noteworthy
The bank also cited the "pass-through effects of the sharp reduction in global oil prices", which kept domestic inflation relatively benign. This characterization - "pass-through effects" of low global oil prices - is perhaps at odds with Deputy Prime Minister Philip Davis' recent assertion that the government's policies are responsible for the low fuel prices which have alleviated some Bahamas Electricity Corporation (BEC) bills.

Meanwhile, in the monetary sector, CBOB reported that banks' key performance indicators showed signs of improvement, as total loan arrears contracted, partly influenced by ongoing debt restructuring activities. Banks recorded an overall profit for the second quarter, a reversal from a year-earlier significant net loss, linked to incidences of one-off charges for goodwill impairment and debt write-offs.

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