By NEIL HARTNELL
Tribune Business Editor
BAHAMIAN commercial banks experienced a collective $49.5 million or 4.1 per cent loan arrears reduction in February 2012, it was revealed last night, although it is probably too early to herald the start of a credit recovery because the improvement was "not broadly based".
Noting the reduction to total bad loans worth $1.159 billion, the Central Bank of the Bahamas, in its monthly report on economic and financial developments for February, said credit between 31-90 days past due saw the greatest improvement, through a $41.4 million or 10.9 per cent decline to $337.2 million.
As a percentage of total loans outstanding, those in arrears by between 31-90 days fell to 5.4 per cent. The decline was less pronounced for Bahamian commercial bank loans in the past 90 days due, or non-performing category, with an $8.1 million or 1 per cent fall to $821.9 million.
These loans, upon which Bahamian commercial banks have stopped accruing interest, dropped to 13.1 per cent of all outstanding commercial bank loans.
While no explanation was given for the February improvement, it likely resulted from some hard-pressed Bahamian borrowers recovering enough from the Christmas spending binge to bring loans back into good standing, or at least make payments on them.
"An analysis by loan category showed that the decline in total arrears was broad-based, with the mortgage component contracting by $28.1 million (4.3 per cent) to $619.6 million, owing to a $28.6 million (14.8 per cent) decrease in the short-term segment, which overshadowed a marginal $0.5 million (0.1 per cent) uptick in non-performing loans," the Central Bank said.
"Similarly, the commercial component fell by $19.1 million (6.4 per cent) to $278.2 million, as both short-term and non-performing loans were reduced by $14.1 million (15.2 per cent) and $5 million (2.5 per cent), respectively.
"Consumer loan delinquencies narrowed by $2.3 million (0.9 per cent), with the $3.6 million (2.1 per cent) fall-off in non-performing loans offsetting a modest $1.3 million (1.4 per cent) rise in short-term arrears."
Bahamian commercial banks increased their loan loss provisions by $4.4 million or 1.4 per cent in February to $329.3 million. The latter's figure as a percentage of total arrears and non-performing loans rose to 28.4 per cent and 40.1 per cent, respectively, with banks writing off $6 million in delinquencies and recovering $2.1 million during the same month.
"Although no notable change is anticipated in the loan arrears situation in the near term, banks' traditional high capital levels should continue to mute any financial stability concerns," the Central Bank said.
Elsewhere, it added: "Tourism activity maintained a positive momentum during February. Preliminary data on room revenue for a sample of hotels in Nassau and Paradise Island posted a 10.9 per cent hike, extending the 8.8 per cent gain for January.
"Average occupancy rates firmed by 4.8 percentage point to 69.2 per cent, to outpace a 0.9 per cent contraction in average daily room rates (ADRs) to $237.68."
But the news on energy costs was less promising. "Energy costs increased in February, as both gasoline and diesel prices rose by 4.5 per cent to $5.31 and by 0.2 per cent to $5.15, over the prior month, and firmed year-on-year by 12 per cent and 17 per cent, respectively.
"In terms of electricity costs, the Bahamas Electricity Corporation's fuel charge was higher, on both a monthly and annual basis, by 0.5 per cent and 40.7 per cent, to 26.05 cents per kilowatt hour (kWh)."
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