The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Total commercial bank ‘bad loans’ fell by more than $100 million during the 2015 first half, although much more remains to be done to restore this key indicator to pre-recession levels.

The Central Bank of the Bahamas, in its newly-released report on monthly economic developments in June, disclosed that ‘bad’ private sector loans decreased by $102 million during the first six months of the year.

That represented an almost-8 per cent decrease, dropping total commercial bank loan arrears to $1.191 billion.

The latter figure illustrates how much more work has to be done to reduce the sector’s pile of bad credit, but at least the 1.5 percentage drop over the 2015 first half reduced total commercial bank loan arrears to 19.9 per cent.

This means that just under $1 out of every $5 lent is at least one month past due.

Breaking down the reduction in commercial bank loans arrears, the Central Bank said: “In terms of the average age, the non-performing component moved lower by $62.1 million (6.4 per cent) to $916.1 million, resulting in a 91 basis point reduction to 15.3 per cent of total loans.

“Similarly, 31-90 day delinquencies fell by $39.9 million (12.7 per cent) to $275.3 million, with the corresponding loan ratio narrowing by 63 basis points to 4.6 per cent.”

The Central Bank added: “A breakdown of the components showed that the fall-off in total arrears was mainly attributed to a $40.4 million (5.8 per cent) contraction in the dominant mortgage segment, to $657.9 million, as both the short-term and non-performing categories decreased by $24.1 million (14 per cent) and $16.3 million (3.1 per cent), respectively.

“Additionally, the consumer component was lower by $40 million (12 per cent) at $292.5 million, due to respective declines in non-accrual loans and 31-90 day delinquencies, of $22.6 million (9.8 per cent) and $17.4 million (17.1 per cent).

“Commercial arrears also contracted by $21.7 million (8.2 per cent), as a $23.2 million fall-off in arrears exceeding 90 days eclipsed the $1.5 million (3.6 per cent) rise in the short-term segment.”

Bahamian commercial banks write-off $65.4 million worth of problem loans during the 2015 first half, and recovered $13.6 million. The sector’s collective provisions for loan losses were slightly higher at $502 million.

Elsewhere, total tourist arrivals to the Bahamas were down by 0.2 per cent at 2.8 million for the first five months in 2015, compared to a 2.2 per cent rise the year before.

This was largely due to a drop in cruise visitors to New Providence and, for the Bahamas, the better news came from the increase in higher-yielding stopover numbers and the rise in hotel room revenues and prices.

Total air arrivals to the Bahamas were up 5.8 per cent to 0.6 million, building on the prior year’s 3.2 per cent rise, while cruise visitors were off by 1.9 per cent to 2.2 million.

“Supported by the upturn in the high value-added stopover segment of the market, particularly over the January to March period, total hotel revenues firmed by 4 per cent during the first half of 2015,” the Central Bank report said.

“The outturn reflected improvements in the average daily room rate (ADR) by 7 per cent ($17.80) to $271.05, and the average occupancy rate by 4.7 percentage points to 74.7 per cent.”

The report added: “A disaggregation of tourist arrivals by ports of entry showed the numbers for New Providence declining by 8.9 per cent to 1.5 million, in contrast to a 1.7 per cent advance in the same period of 2014, as a 13.2 per cent fall in the sea segment overshadowed the 2.8 per cent improvement in air arrivals.

“Visitors to Grand Bahama recovered by 40.4 per cent to 0.4 million, from the prior year’s 15.3 per cent contraction, benefiting from the opening of a new mid- sized resort and the launch of new routes, which secured a 22.4 per cent boost in air traffic, and sea passengers were higher by 44.7 per cent.

“Visitors to the Family Islands increased by 1.9 per cent to 0.9 million, behind a 10.8 per cent expansion in 2014, owing to growth in both air (10 per cent) and sea (0.9 per cent) arrivals.”