Jeffrey Todd

Guardian Business Editor

jeffrey@nasguard.com

Nassau — The Central Bank is reporting a decline in commercial delinquencies of more than eight percent so far this year, as institutions manage loan arrears through debt structuring and write-offs.

According to the latest Monthly Economic and Financial Developments report, commercial delinquencies fell $24.2 million. However, that improvement did not extend to mortgage delinquencies, which rose by nearly $11 million during this period compared to the previous year.

Banks continued to bolster their loan loss provisions from January to June, the report noted, rising $46.4 million, or 15.5 percent. Total loan write-offs for the six-month period amounted to $75.2 million, against recoveries of $20.8 million.

"Loan delinquencies in the banking sector are anticipated to stay at elevated levels, until growth in the economy becomes more broad-based and the employment situation improves appreciably," the report concluded in its outlook. "Nonetheless, it is expected that banks will remain well capitalized, mitigating any risk to financial stability."

The Central Bank is forecasting moderate growth momentum in the second half of the year based on the latest figures in tourism, the public sector and foreign investment-led construction projects. The report felt this situation could lead to lower unemployment levels, but with the caveat on how the global economy evolves over the course of 2012.

In terms of the fiscal deficit, it widened by $55.6 million, or 27 percent, for the 10 months to April compared to the same period in 2011. In all, the Central Bank characterized it as a "deterioration," as higher expenditures outpaced an increase in revenues.

Tax collections expanded by $17 million, mostly due to an improvement in international trade taxes. The Central Bank also reported a steady uptick in the tourism sector.

"Preliminary information from a sample of hotels in Nassau and Paradise Island showed room revenues firming in June, by 8.3 percent, as the nine percentage point advance in occupancy rates to 77.7 percent compensated for the 3.8 percent contraction in average daily room rates to $228.04."

The report noted that, compared to 2008, occupancy rates are trending above their pre-recession levels.

That said, rising competition and sluggish growth in key markets means room rates are on the decline, as The Bahamas strives to stay competitive.

The Central Bank identified that trend as a reason for lower overall earnings going forward.