By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Almost $1 out of every $4 mortgage dollars lent by Bahamian commercial banks was past due at end-October 2014, Tribune Business can reveal, as the Government moves to revive its “dead in the woods” relief plan.

The Central Bank of the Bahamas’ latest credit quality indicators report, obtained by this newspaper, shows the depth of the debt delinquency crisis plaguing Bahamian society and the economy, with more than $700 million worth of mortgage credit past due.

This, the report reveals, equates to 24.04 per cent - almost one-quarter - of the banking industry’s $2.885 billion worth of outstanding mortgage credit being in default.

Franklyn Wilson, who has been personally charged by Prime Minister Perry Christie with reviving the Government’s Mortgage Relief Plan, told Tribune Business yesterday that the high level of Bahamian loan delinquencies was occupying the attention of the Canadian-owned banks global head offices (see other article on Page 1B).

And he warned that the relatively high level of non-performing mortgages and commercial loans, with an estimated 4,000 homes over 90 days past due on their repayments, was altering Bahamian society’s “core values”.

The Arawak Homes chairman is likely referring to the banking industry’s increasing focus on high-yielding, less troublesome, consumer loans, switching its focus from the more productive areas of the Bahamian economy.

Borrowers have increasingly put meeting consumer loan payments above those on their home, undermining the philosophy that real estate lending is the most secure category.

Home ownership is also increasingly been put beyond the reach of many Bahamians, and the pile of non-performing loans makes new lending for home purchases/construction difficult.

The result is a ripple effect throughout the Bahamian economy and society, with real estate and construction activity - two key industries - becoming depressed.

Confirming that he is seeking to revive the Government’s “dead in the woods” Mortgage Relief Plan, Mr Wilson told Tribune Business: “The problem is very, very significant.

“It’s significant enough to have gathered the attention of senior management at international banks with offices beyond the Bahamas.”

Asked about the economic implications, he added: “It goes even deeper. It can affect the core values of this society. The complexity of the problem is more appreciated than it was two-and-a-half years ago. It’s a huge problem.”

Of the past due mortgages, some $519.52 million, or 18.01 per cent of the total, are non-performing, meaning they are over 90 days past due and the banks have stopped accruing interest on them. A further $184.15 million, or 6.38 per cent of the total, is between 31-90 days past due.

The data obtained by Tribune Business shows that mortgage loans are the only private sector category where bad loans have increased in 2014, rising by $12.68 million or 1.83 per cent from end-2013 levels.

The impact of all this, when combined with high consumer and commercial loan delinquencies, is being felt by the banks in their provisioning.

Total Bahamian commercial bank loan loss provisioning rose by 30.77 per cent for the 10 months to end-October, growing by $116.521 million to hit a total $495.245 million.

Of this sum, some $392.755 million was accounted for by loan-specific provisions, which increased by $108.156 million or 38 per cent for the year to end-October.

General provisions, meanwhile, were up by $8.365 million or 8.89 per cent to $102.49 million.

The banks are also having difficulty in finding new customers to qualify for the more than $1 billion in surplus system liquidity, which they are keen to lend out.

Total private sector loans outstanding declined by $144.06 million, or 2.34 per cent, in the first 10 months of 2014 - falling from $6.164 billion at end-December 2013 to $6.02 billion.