October 05, 2016
According to the Central Bank of The Bahamas, mortgage, commercial, and consumer arrears increased in August 2016 versus August 2015.
"Mortgage arrears firmed by $6.3 million (1.0 percent) to $622.5 million, owing largely to an $8.8 million (5.8 percent) expansion in the short-term component, which overshadowed the $2.6 million (0.6 percent) decline in non-accrual claims.
"Similarly, consumer arrears increased by $6.0 million (2.2 percent) to $278.2 million, solely attributed to a $6.0 million (7.7 percent) rise in short-term delinquencies.
"Further, commercial arrears advanced by $5.3 million (2.3 percent), due to gains in both the non-performing and short-term segments of $3.7 million (1.9 percent) and $1.6 million (4.0 percent), respectively.
"Arrears as a proportion of total private sector claims fell by 1.6 and 1.5 percentage points for mortgages and consumer credit, respectively, but rose by 2.8 percentage points for commercial loans, when compared to the same period of 2015," said the Central Bank.
Meanwhile, the regulator said that growth in Bahamian dollar credit decelerated to $6.2 million, from $27.9 million in 2015 as net claims on the government declined by $4.3 million, reversing the prior year's $13.6 million advance.
Gains in the private sector also decreased to $9.3 million from $16.4 million in the prior period. Underlying this development, mortgages fell by $5.9 million, a reversal from a $5.4 million gain a year ago. However, growth in consumer credit almost steadied at $14.0 million, while commercial loans firmed by $1.2 million, countering the $2.0 million reduction in 2015.
Conversely, credit to the rest of the public sector grew by $1.3 million, a turnaround from 2015's $2.2 million contraction, according to the bank's Monthly Economic and Financial Developments (MEFD) August 2016 report.
The bank asserted that monetary developments for the month of August featured a $70.6 million contraction in excess liquid assets--a broad measure of liquidity--to $1,515.1 million, owing mainly to net foreign currency outflows, a reversal from a $42.8 million expansion in 2015.
"Comparatively, the narrower excess reserves decreased slightly by $2.4 million to $811.1 million, following last year's $15.3 million reduction," the report stated.
In addition, banks' credit quality indicators deteriorated over the review period.
To make that point, the report stated that private sector arrears rose by $17.5 million (1.6 percent) to $1,138.8 million, representing a 25 basis point increase in the share of arrears to total loans to 19.1 percent; although on a yearly basis, the ratio improved by 1.0 percentage points.
"This outcome was attributed in part to a $16.4 million (6.1 percent) rise in short-term delinquencies (31-90 days) to $286.0 million, raising the corresponding loan ratio by 27 basis points to 4.8 percent.
"Non-performing loans -- arrears over 90 days and on which banks stopped accruing interest -- were virtually unchanged at $852.8 million, with the relevant ratio staying at 14.3 percent of the total. On a yearly basis, both the non-performing and short-term delinquency rates fell by 78 and 27 basis points, respectively," said the bank.
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