The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Visitor arrivals through Lynden Pindling International Airport (LPIA) were slightly ahead of last year for the first 10 months of 2016, despite a 16.5 per cent October drop-off due to Hurricane Matthew.

The Central Bank’s October economic developments report confirmed that the Bahamas’ tourism performance continued to be “lacklustre” in the storm’s wake, with air arrivals to Nassau from the core US market down 20 percent year-over-year.

“Data from the Nassau Airport Development Company (NAD) suggested a significant weather-related reduction in passenger traffic through the country’s main airport, by 16.5 per cent in October net of domestic departures, relative to the prior year,” the Central Bank said.

“A breakdown of the major categories showed that the number of departures to the dominant US market fell by 20 per cent.

“However, the number of visitors from other countries firmed by 3.2 per cent. Conversely, data from NAD for the 10-month period showed a 0.9 per cent gain relative to 2015, which suggests a mild improvement in the sector’s performance.”

Acknowledging that temporary hotel closures and cruise ship diversions were bound to have affected the Bahamas’ October tourism performance, the Central Bank said this had at least partially been offset by the uptick in construction activity sparked by Matthew-related repairs.

“The recovery from Hurricane Matthew will continue to dominate domestic economic developments, as rebuilding activity provides some impetus to the construction sector,” the regulator added.

“The re-start of the multi-billion dollar Baha Mar project will also support the sector’s near-term prospects and, upon completion, contribute to growth in tourism output.

“Against this backdrop, the declines in employers’ payrolls due to the temporary closure of businesses which suffered damage should be balanced by construction sector gains, while some firming in the inflation rate from its current low base is projected, reflecting increased demand for construction-related inputs.”

Meanwhile, the commercial banking industry’s total loan arrears fell by $32 million or 2.8 per cent during October, largely due to one institution selling a portion of its non-performing loan book.

No details on the sale, or the bank’s identity, were disclosed, although the sale appears to have involved non-performing mortgages judging by the $45.9 million contraction in mortgage loan credit during October.

“Reflecting mainly one entity’s non-performing loan sales, banks’ credit quality indicators improved during October,” the Central Bank said.

“Specifically, total private sector arrears contracted by $32 million (2.8 per cent) to $1.121 billion, and by 48 basis points to 18.8 per cent of total private sector loans, as the non-performing component - loans in excess of 90 days in arrears - fell by $50.4 million (5.9 per cent) to $804.8 million, with the relevant ratio declining by 81 basis points to 13.5 per cent.”

It added: “In contrast, short-term delinquencies (31 to 90 days) firmed by $18.4 million (6.2 per cent) to $316.2 million, resulting in a 32 basis point uptick in the attendant ratio to 5.3 per cent.

“Similar trends were noted on a yearly basis, as the total arrears rate declined by one percentage point, anchored by a 1.5 percentage point reduction in the non-performing loans (NPL) rate.”

Breaking this down further, the Central Bank said: “By loan type, the contraction in arrears reflected a significant fall-off in mortgage delinquencies by $37 million (5.9 per cent) to $596.2 million, as the non-accrual segment contracted by $42.8 million (9.2 per cent), offsetting the $5.8 million (3.4 per cent) increase in short-term delinquencies.

“Conversely, the consumer and commercial components firmed by $2.9 million (1 per cent) to $286.7 million, and by $2.1 million (0.9 per cent) to $238.1 million, respectively.

“On an annual basis, declines in non-performing ratios were recorded for both mortgages (by 2.3 percentage points) and consumer credit (by 1.6 percentage points) to 15.3 per cent and 7.9 per cent, respectively. However, the rate for commercial credit rose by 2.3 percentage points to 23.3 per cent.”