Central Bank: Number of non-performing loans up in August

The Central Bank of The Bahamas said in its Monthly Economic and Financial Developments (MEFD) report for August 2025 that the number of non-performing loans has increased. The MEFD report said: “Commercial banks’ credit quality indicators, although showing annual improvements, deteriorated slightly in the month of August, owing primarily to a rise in non-performing loans. Specifically, total private sector arrears grew by $2.2 million (0.5 percent) to $459.5 million, while the attendant ratio stabilized at 7.7 percent. “A disaggregation by the average age of delinquency revealed that nonperforming loans (NPLs) — arrears in excess of 90 days and on which banks have stopped accruing interest — increased by $3.0 million (1.0 percent) to $317.7 million, as the relevant ratio held steady at 5.3 percent. “Further, the NPL ratio for commercial loans rose by 43 basis points to 3.5 percent. However, the ratios for mortgages and consumer loans fell by 10 basis points to 7.5 percent, and by five basis points to 3.9 percent, respectively. Conversely, short-term arrears (31-90 days) declined by $0.7 million (0.5 percent) to $141.8 million, resulting in the attendant ratio narrowing by three basis points to 2.4 percent. “An analysis by loan type indicated that mortgage delinquencies grew by $3.8 million (1.4 percent) to $284.4 million, underpinned by a $6.2 million (7.0 percent) growth in short-term arrears, which overshadowed the $2.4 million (1.2 percent) decrease in non-accrual loans. Similarly, consumer loan arrears increased by $0.6 million (0.5 percent) to $128.2 million, attributed to a $1.1 million (2.7 percent) uptick in the short-term segment, which negated the $0.6 million (0.7 percent) reduction in the long-term component. “In contrast, commercial delinquencies contracted by $2.2 million (4.4 percent) to $46.9 million, as the $8.1 million (72.3 percent) decline in short-term arrears outstripped the $5.9 million (15.6 percent) increase in the non-performing category. “Meanwhile, banks increased their total provisions for credit losses by $0.8 million (0.3 percent) to $272.4 million in August. However, the ratio of total provisions to total arrears declined by 11 basis points to 59.3 percent, while the ratio of total provisions to non-performing loans fell by 55 basis points to 85.7 percent. During the review month, banks wrote off an estimated $5.2 million in overdue loans, and recovered approximately $4.2 million.” The MEFD report also said: “In interest rate developments, the weighted average loan rate fell by 31 basis points to 11.37 percent. Conversely, the weighted average deposit rate rose by 25 basis points to 0.68 percent. The highest deposit rate offered was 3.75 percent, on fixed balances over 12 months. “Total Bahamian dollar deposits rose by $14.7 million in August, a turnaround from a $27.4 million contraction in the same period of the previous year. Leading this outturn, demand deposits advanced by $31.7 million, a switch from a reduction of a similar magnitude a year earlier. However, savings deposits growth tapered to $4.5 million from $15.3 million; and the decline in fixed deposits extended to $21.5 million, from $11.4 million in the year prior. Meanwhile, residents’ foreign currency deposits increased by $27.0 million, a shift from a $26.9 million contraction in 2024.”