Non-performing debts climb 73% at commercial banks
Financial institutions regulated by the central bank now manage assets valued at J$820 billion, new data shows, but the numbers also reflect a deterioration in loan delinquencies especially in the commercial banking sector.
In one year, commercial bank non-performing loans (NPL) shot up 73 per cent, or by J$9.7 billion, to J$23 billion at December 2011.
The commercial banks were the main contributor to the new high of J$32 billion in non-performing loans sitting on the books of deposit-taking institutions.
Bank of Jamaica classifies NPLs as debt payments overdue for three months or longer.
National Commercial Bank Jamaica, at its financial yearend in October, disclosed that loans in this category had sextupled from J$693 million to J$4.1 billion. Palmyra Resort which contributed to the deterioration was placed in receivership at mid-year.
The bank said otherwise that it restructured J$12 billion of loans that were impaired or at best past due, while J$2.8 billion was classified as bad debt or impaired.
Scotia Group Jamaica last year classified J$5 billion of its J$100-billion portfolio as impaired and wrote off J$1.9 billion of bad debts.
In the near-bank sector, deteriorations in the position of Capital and Credit Merchant Bank also pushed delinquencies 11 per cent higher to J$3.17 billion in non-performing loans, up from J$2.9 billion at December 2010.
Capital & Credit said the majority of its J$3.2-billion NPL portfolio is related to 13 large loans, of which seven "are being resolved as we now have in-house signed sales agreements with respect to the underlying collateral and the pledging of additional collateral by clients," said spokeswoman for the Capital & Credit Financial Group, Michelle Wilson-Reynolds.
"Of note, since December 2011, cash offers have been made to settle two additional large accounts. The remaining accounts are proceeding through the courts," she told the Financial Gleaner on Tuesday.
Assets for sale
The merchant bank has put up assets up for sale to recover some of the bad debt. Reynolds said the assets have a market value of approximately J$5.2 billion and forced sale value of J$4.12 billion.
Capital & Credit is being acquired by Jamaica Money Market Brokers Limited at J$4.22 per share, but neither party were willing to comment on how CCMB's debts would be structured under the deal, saying the central bank was still reviewing the transaction.
Meantime, building societies have distinguished themselves as a sector in the latest BOJ data, having eliminated two per cent of non-performing loans, which are now estimated at J$5.7 billion.
The BOJ data values the commercial banking centre at J$614 billion by assets, J$266 billion by loans and J$400 billion by deposits.
Building societies have assets totalling J$185 billion, mortgage loans portfolios of J$89 billion, and savings of J$122 billion.
The two FIA licensees or near banks reported assets of J$21 billion, reflecting deterioration of J$3 billion year over year, a compressed loan portfolio of J$6.9 billion and deposits of J$6.5 billion.