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Banks write-off $45m in loans    
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Bahamas Tribune – Bahamian commercial banks collectively wrote-off $45 million in loans during the first four months of 2011, data published yesterday by the Central Bank of the Bahamas revealed, with industry loan loss provisions hitting $284.7 million.

The Central Bank’s monthly report on economic developments for April showed that the commercial banks increased loan loss provisions by $11.3 million during that month, increasing their ratio to total credit arrears and non-performing loans to 24.3 per cent and 42.1 per cent, respectively.

The banking industry write-off a further $12.7 million in delinquent loans during April, bringing this total to $45 million. Recoveries amounted to $3.4 million, while in March the banking industry restructured $12.9 million in private sector loans.

Speaking on the industry, not his institution, Paul McWeeney, Bank of the Bahamas International’s managing director, said the banks were obliged to comply with international accounting standards in writing off delinquent loans once they moved past a certain date.

This, he added, did not preclude the banks from recovering these sums or, indeed, the borrowers becoming current on their obligations once the economy – and with it, employment and incomes – improved. Once this happened, Bahamian commercial banks would be able to write these provisions back into their income statements.

With foreign exchange reserves standing at “record highs” of $1.134 billion at end-April, thanks to the receipt of the $210 million foreign currency proceeds from the Bahamas Telecommunications Company’s (BTC) privatisation, the Central Bank said the Bahamian economy “maintained a stable to improving trend” during the month.

“Indications are that positive developments in the key group business contributed to steady gains in tourism output, while a number of foreign investment-related and public sector projects underpinned activity in the construction sector,” the Central Bank said.

Average prices for gasoline and diesel rose by 6.9 per cent and 9.8 per cent month-over-month during April, with year-over-year increases standing at 17.6 per cent and 35.3 per cent. This took gasoline and diesel prices to $5.28 and $5.06 per gallon respectively.

Despite the negative impact from rising commodity prices, especially oil and food, the Central Bank agreed with the Government’s and International Monetary Fund (IMF) estimates that real gross domestic product (GDP) growth in 2011 will be “somewhat higher than last year’s 1 per cent expansion”.

Although inflation was expected to firm, the Central Bank said: “Alongside the rebound in foreign investment-related construction activity, expectations are for an improving tourism performance, particularly in the high value-added stopover component of the market, where anecdotal information suggests steady gains in the key group segment.

“As a consequence, employment conditions are anticipated to gradually improve, with the greatest near-term job opportunities arising in the construction-related sectors and broadening over time.”

Liquidity and external reserves were expected to “remain buoyant” throughout 2011, supported by one-off foreign currency inflows and real activity.

Consumer spending, though, was likely to enjoy a mild recovery from “two years of consistent declines”.

Source: Delta Quest

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