The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

First quarter departure traffic from Lynden Pindling International Airport (LPIA) surged to its highest level for ten years, the Central Bank has revealed, adding to improving economic confidence.

The regulator, in its assessment of economic developments for the first three months of 2018, found that the 13.8 per cent year-over-year increase in passenger departures - net of domestic travellers - took numbers to levels not seen since before the 2008-2009 recession.

"An observation of long-term trends in first quarter showed that departure traffic from LPIA was the highest it has been since 2008, when the economy entered into a recession," the Central Bank said, indicating that the tourism and hotel industries - aided by an early Easter - had enjoyed a positive winter season.

"Growth in the tourism sector reflected sustained global growth, increased activity at Baha Mar, the addition of new airline routes and the early Easter holiday," its report added, acknowledging the impact from the $4.2 billion project's extra room inventory.

The Central Bank revealed that Baha Mar's final resort property, the Rosewood, is scheduled to open on May 26-27 to coincide with the US Memorial Day Weekend, which should ensure strong occupancies during a peak demand period. Some 350 managerial and support staff are due to be hired by that date.

Stepping aside from the hotel industry, the regulator said an April 18, 2018, review of Airbnb data revealed that the Bahamas had 845 active properties on the vacation rental site, mostly featuring one to two bedroom homes.

The average daily rate (ADR) charged for such properties was $194, with occupancy rates at around 67 per cent. There were some 449 active Airbnb 'hosts' in Nassau, and the Central Bank said: "Most hosts are professional, multi-listings hosts (62 per cent), while 38 per cent have single listings."

Improved tourism performance and economic confidence has yet to filter through to the Bahamian commercial banking industry and its customers, with excess liquid assets in the system increasing by $97 million during the 2018 first quarter to hit $1.9 billion.

The latter figure represents assets available for lending by the banks, but their continuing risk aversion - coupled with a tightened qualifying criteria and deleveraging by debt-burdened Bahamians - means there are few borrowers able to access credit.

As a result, the private sector and mortgage markets lack the financing necessary to get the economy moving. "Liquidity should remain elevated over the near-term, reflecting both banks' conservative lending practices and their clients on-going efforts to deleverage," the Central Bank said.

Bahamian dollar credit contracted by $91.3 million during the 2018 first quarter, with that outstanding to the private sector dropping by $53.7 million. Mortgage and consumer credit fell by $12.3 million and $41.4 million, respectively, while commercial credit improved marginally by $200,000.

Still, the aggressive restructuring and sale of non-performing loans (NPLs) by commercial banks dropped 'bad credit' to below 10 per cent by end-March 2018. "At end-March 2018, arrears and NPL rates stood at 15.1 per cent and 9.9 per cent, respectively," the Central Bank said.

"This is higher than the 7.8 per cent and 4.1 per cent recorded in the pre-recessionary period of March 2007, but significantly below the 21.5 per cent and 16 per cent at end-March 2014 (when rates were near their peaks).

"Arrears and NPLs are anticipated to continue their downward trajectory, amid banks' asset sales and sustained debt restructuring measures."

The Central Bank added that the external reserves increased by $189.1 million during the 2018 first quarter to hit $1.597 billion. "At end-March, reserves were equivalent to approximately 6.4 months of total merchandise imports, compared to 3.7 months in 2017," the Central Bank said, adding that the 'benchmark' is three months' coverage.

"Reserves also represented 100.6 per cent of demand liabilities, compared to 70.5 per cent at end-March 2017."