By NEIL HARTNELL
Tribune Business Editor
Mortgage and consumer loan delinquencies soared by $91.8m in two months as tourist arrivals to The Bahamas dropped 98.4 percent year-over-year for October, the Central Bank has revealed.
The latest grim economic data from the regulator's report on November's developments, while not surprising, further exposes the extent of the devastation inflicted by COVID-19 with many Bahamian households and individuals unable to meet their debt servicing obligations after loan deferral initiatives came to an end.
Mortgage loan delinquencies increased by a further $37.4m during November, although their consumer equivalent actually dropped by $3.6m. When added to the $58m rise in mortgage and consumer loan delinquencies from the previous month, this contributed to a more than $90m jump in a 61-day period.
"Banks’ credit quality indicators deteriorated during the month of November, reflecting a rise in short-term delinquencies, attributed to the negative effects from the ongoing COVID-19 pandemic. Specifically, total private sector arrears grew by $45m (6 percent) to $796.2m, elevating the relevant ratio by 80 basis points to 14.2 percent," the Central Bank said.
"An analysis by average age of delinquency revealed that short-term arrears (31-90 days) rose by $43.3m (15.3 percent) to $325.7m, as the corresponding ratio rose by 77 basis points to 5.8 percent. Similarly, non-performing loans (NPLs) increased by $1.6m (0.4 percent) to $470.6m, resulting in a 32 basis point rise in its accompanying ratio to 8.4 percent.
"A breakdown by loan category showed that the growth in short-term arrears was led by mortgage delinquencies, which expanded by $37.4m (8.5 percent) to $476m, as the $41.3m (25.7 percent) rise in the short-term segment outstripped the $3.9m (1.4 percent) fall-off in non-performing loans," the Central Bank added.
"Similarly, commercial arrears rose by $11.1m (17.6 percent) to $74.5m, with both the short-term and the non-accrual components registering growth of $10.2m (45.8 percent) and $0.9m (2.2 percent), respectively.
"In contrast, consumer loan delinquencies declined by $3.6m (1.5 percent), owing to an $8.2m (8.3 percent) reduction in the 31-90 days category, which eclipsed the $4.6m (3 percent) increase in the long-term segment."
However, the Central Bank said the commercial banking sector actually reduced its collective loan loss provisions by $10.4m or 1.9 percent during November despite the rise in bad loans, dropping this to $541.3m.
"As a consequence, the ratio of total provisions to arrears fell by 5.5 percentage points to 68 percent," the regulator added. "In addition, the ratio of total provisions to non-performing loans reduced by 2.6 percentage points to 115 percent, while specific provisions to non-performing loans was lower by 2.5 percentage points at 78.1 percent."
Elsewhere, the Central Bank warned the improved outlook for travel and tourism in the 2021 second half due to the arrival of COVID-19 vaccines will be "heavily outweighed by foregone business during the first half of the year, which would have included the lucrative winter season".
It added: "Official data provided by the Ministry of Tourism revealed that total foreign arrivals reduced by 98.4 percent in October, contrasting with a 6.6 percent growth a year earlier. In particular, air visitors decreased by 92.7 percent, extending last year’s 11.4 percent decline. Similarly, sea traffic fell by 99.5 percent in comparison to a 10.7 percent gain in 2019," the Central Bank said.
"A breakdown by major islands showed that in New Providence total arrivals were only 0.9 percent of the prior year’s outturn, underpinned by significant reductions in both sea (99.8 percent) and air (96.9 percent) arrivals.
"For Grand Bahama, total visitors matched just 5.6 percent of the 2019 volumes, as air arrivals reached 62.1 percent of the previous year’s levels. Similarly, visitors to the Family Islands corresponded to 2.3 percent of the prior year’s volumes, with air arrivals matching 34.5 percent of the 2019 levels," it added.
"On a year-to-date basis, total foreign arrivals contracted by 70.5 percent, a turnaround from the 10.2 percent expansion in the previous year. Underlying this outcome was a 73.4 percent reduction in air arrivals, vis-à-vis a 10.1 percent growth in 2019. Similarly, sea passengers reduced by 69.6 percent, relative to a 10.2 percent increase last year."
However, the short-term vacation rental industry was again boosted by the domestic market. "Short-term rental market data, provided by AirDNA, featured positive movements during the month of November, supported by domestic demand," the Central Bank added.
"Specifically, total room nights sold rose by 49.7 percent, surpassing the 36.1 percent increase in the prior year, bolstered by advancements in entire place accommodations by 52.1 percent and hotel comparable listings by 45.5 percent.
"Pricing data revealed the average daily room rate (ADR) for both entire place listings and hotel comparable listings grew by 22.2 percent and 13.9 percent to $451.26 and $163.62, respectively. Domestic spending also stemmed the cumulative losses, when compared to the hotel sector," the Central Bank added.
"Over the 11-month period, total room nights sold declined by 46.4 percent, as bookings for entire place listings were lower by 47.5 percent and hotel comparable bookings contracted by 36.7 percent. Pricing indicator outcomes were mixed, as the ADR for entire place listings rose by 4 percent to $406.43, while the ADR for hotel comparable listings fell by 1.2 percent to $152.02."