Thu | Oct 18, 2018

Non-performing loans tick upwards in March quarter

Published:Friday | June 26, 2015 | 12:01 AM

Non-performing loans (NPLs) across the financial system in Jamaica climbed by $1.4 billion, or six per cent, over the year to March 2015.

The increase in loans not serviced for three months or more almost entirely reflected credit quality among commercial banks.

In particular, National Commercial Bank Jamaica (NCB) reported a $1.2-billion increase in its NPLs over the 12-month period, from $7.6 billion at the end of March 2014 to $8.8 billion a year later.

The commercial bank said that its "activities to manage delinquency are on-going and remain proactive and robust, with the implementation of an automated dialer and collections management system.

"We continue to monitor the environment and respond to changes that impact us and our customers," it said in its latest financial statements.

The bank's NPLs as a proportion of total loans rose to 5.4 per cent from 4.9 per cent a year earlier.

The NPL-to-loan ratio across the financial system remained unchanged at 4.9 per cent, as total loan growth surpassed NPL growth. Outstanding loans grew by 6.8 per cent year-over-year to $500.8 billion as at March 31, 2015, while NPLs grew by 6.3 per cent to $24.3 billion.

For commercial banks, NPL-to-loan ratio inched up by 0.1 percentage point to 4.9 per cent, as NPL growth of 8.3 per cent outpaced loan growth of 5.6 per cent. Additionally, the commercial banking sector's NPL growth in March reflected a reversal - it compares to 12.6 per cent of shrinkage at March 2013 and further contraction of 15 per cent at March 2014.

Still, loan delinquency has been trending downwards since it peaked in 2011. Then, NPLs reached as high as $32.2 billion, or 8.9 per cent of total loans issued across the system.