By NEIL HARTNELL Tribune Business Editor BAHAMIAN commercial banks are looking towards the creation of a credit bureau to help curb "financial irresponsibility" in society, believing it could deter mortgage borrowers from defaulting on their home loans in favour of meeting consumer credit repayments. Responding to a series of Tribune Business questions on behalf of the Clearing Banks Association (CBA), its chairman, Anwer Sunderji, also said the 1.9 per cent growth in bank credit extended to the private sector in 2011 did not reflect any improvement in the underlying Bahamian economy. Noting that some Bahamian homeowners had exploited the difficulty commercial banks were having in finding new buyers for 'distressed properties', Mr Sunderji said these clients had decided to default on their mortgages even though they still had jobs. "Regrettably, some borrowers who are employed have made a strategic decision to default on their mortgages, while maintaining their car payments and credit card payments," the CBA chairman told Tribune Business. "The planned introduction of a credit bureau may reduce this level of financial irresponsibility." Central Bank of the Bahamas governor, Wendy Craigg, recently told this newspaper that a Bahamian credit bureau should be established by late 2012 or early 2013. A credit bureau would, in theory, allow Bahamian commercial banks and all other lenders to access data on every individual and corporate borrower in this nation. It would enable them to assess the creditworthiness of all loan applicants prior to taking any decision on whether to approve credit, examining the level of their existing obligations and track record with other lending institutions. Currently, Bahamas-based lenders have no way of tracking, let alone catching, individuals who bounce from one lending institution to another, leaving a trail of unpaid debts behind. Meanwhile, Mr Sunderji, on behalf of the CBA, said it was "cautiously optimistic" that 2012 would see a "tapering off" of growth in the Bahamian banking industry's non-performing loan portfolio. "The onset of the recession in 2008 showed a sharp increase in loan arrears shortly afterwards, and into 2009 and 2010, as Bahamian companies restructured their labour force to cope with declining revenues, and unemployment levels increased," the CBA chief said. "Total loan arrears were $1.09 billion in December 2009 (17.6 per cent), $1.145 billion in December 2010 (18.2 per cent) and $1.214 billion in December 2011 (18.92 per cent). The industry is cautiously optimistic that it will see a tapering off in the growth in arrears in 2012. "The Central Bank and other multilateral institutions expect the Bahamas to post modest GDP growth in the region of 2 per cent in 2012. The banking sector is hopeful that the expected growth will occur and unemployment will decrease." And Mr Sunderji, on the CBA's behalf, added: "The banking industry believes that the situation will improve only after the economy shows tangible and sustained signs of recovery, and unemployment levels ease. "In the meantime the industry remains focused on assisting borrowers who face difficulty in servicing their debts, and collectively has restructured tens of millions of dollars of loans by extending terms and reducing monthly debt service for affected borrowers, and/or by allowing borrowers to make other payment arrangements. "There is no doubt that the severity of this recession is unprecedented, as it is global in nature and deeper and more protracted than before. The twin engines of the Bahamian economy of tourism and international banking have been hurt by a severe contraction in discretionary consumer spending in the US, a collapse in global financial markets and by aggressive moves by developed countries to increase tax revenues by targeting international financial centres such as the Bahamas. All these forces have impinged on corporate profits and resulted in restructuring." While private sector credit strengthened by $114.3 million during 2011, the CBA chief said: "t is difficult to ascribe a modest credit expansion as a sign of economic recovery. "The banking system is very liquid, and excess liquidity is generally costly to banks. It is possible that banks are lending selectively and more prudently, with lower loan to value ratios than before, so that the excess liquidity can be put to work." As for the $34.4 million or 2.8 per cent contraction in the Bahamian commercial banking industry's total loan arrears to $1.208 billion in December 2011, Mr Sunderji, on the CBA's behalf, said: "It is unclear why delinquency levels 'improved' in December, but it is possible that certain institutions passed year-end entries that reduced the balances for some of these loans. "There was no improvement in fundamentals to support any sustained improvement in arrears."