|Loan provisions rise $15.2M in April|
Guardian Business Reporter
Published: Jun 11, 2012
A new report from the Central Bank has recorded a $13.3 million increase in outstanding consumer loans for April, spiking 5.2 percent, marking the first time this segment has risen in six months.
According to the recently released Central Bank’s Monthly Economic Financial Developments (MEFD) report, provisions for loan losses also increased by $15.2 million during this period.
“There was a $10.3 million (11.4 percent) increase in the short-term category and a more modest $3.0 million (1.8 percent) growth in non-performing loans,” the report said. “In contrast, both commercial and mortgage loan arrears decreased by $3.8 million (1.3 percent) to $298.4 million, and by $2.2 million (0.4 percent) to $634.1 million,
respectively, as contractions in the short-term 31-90 segment outweighed growth in non-performing loans.”
In terms of loan loss provisions, the $15.2 million rise represented a 4.6 percent increase, bringing the total figure to $343.4 million for the period. Consequently, the ratio of provisions to arrears and non-performing loans slightly grew to 28.6 percent and 41.4 percent respectively. It’s a huge difference compared to last month, where financial institutions only raised its provisions by $2 million.
Banks also wrote off $13.9 million in loans in April, according to the report, with recoveries standing at $3.9 million.
Those figures are in the same ballpark of what was recorded in the month of March, where $12 million in loans were wrote off and $3 million in recoveries occurred.
Despite the heightened activity in the loan department, the domestic credit segment performed well during April.
“Total domestic foreign currency credit advanced by $4.9 million, a turnaround from a $72.9 million contraction in 2011,” the report said. “Buoyed by a local utility’s transaction, credit to the private sector rose by $20.8 million, in contrast to the marginal $0.6 million decrease a year earlier. Claims on public corporations firmed by $1.9 million, following the previous year’s $2.5 million decrease.”
The MEFD report said, going forward, the monetary sector outlook will appear to be “stable,” but certain indicators could change that forecast.
“External reserves are forecasted to retreat moderately from their typical mid-year peak levels over the remaining months, in line with the traditional period of increased foreign currency demand,” the report said. “With no anticipated notable change in near-term employment conditions and the level of consumer indebtedness, banks’ credit quality indicators are anticipated to remain elevated; however, capital levels are projected to stay robust, negating any financial stability concerns.”