XM Loans - The Mortgage Optimizer

By TAMARA McKENZIE
The incidence of loan servicing difficulties among private borrowers at domestic banks escalated during the closing months of 2008, according to the latest annual report released by the Central Bank of the Bahamas.
"The total value of private sector loans encountering payment arrears of at least 30 days rose broadly by $235.8 million or 44 percent, to $771.8 million; corresponding to an arrears rate of 12.5 percent relative to 9.4 percent in 2007 and 7.8 percent in 2006," the 2008 report outlined.

Non-performing loans, those with payments past due of more than 90 days and on which banks have stopped accruing interest, rose to 6.1 percent of the total loan portfolio, up from 4.5 percent in 2007 and 4.2 percent in 2006.

The Bank noted that the most significant deterioration was in residential mortgages, where the value of the affected facilities rose by more than a third to $364 million – which is equal to a 2.8 percentage point increase in the arrears rate to 13.2 percent.

The Central Bank reports that, consumer loan arrears increased by 39.6 percent to $240 million, representing 10.8 percent of the respective portfolio, compared to 8.3 percent in 2007. Similarly, the value of commercial loan arrears escalated to $161 million from $94 million in 2007, which corresponded to a higher arrears rate of 15.5 percent vis-a vis 9.3 percent.

The Bank said in response to these trends, domestic banks increased loan provisions by 40.2 percent, which equates to 2.7 percent of the total claims relative to 2.1 percent in December 2007. However, the ratio of provisions to non-performing loans fell by 2 percentage points to 46 percent.

The Bank further noted that the rise of bad debt provisions, combined with weaker income streams and increased operating costs, led to reduced bank profitability during 2008.

"The latest data for the 12 months to September 2008 revealed a comparative decline in estimated net income of $18.4 million to $289.2 million," the Bank said.

On the bright side, the Central Bank said the net margin of banks improved, but by a reduced amount of $22.1 million, based on a 2.9 percent increase in interest income and a 0.2 percent contraction in interest expense.

"However, commission and foreign exchange income fell by 14.8 percent to $30.1 million. In an offset, the operating expenses for the period rose at a moderately firmer pace of 9.5 percent to $253.1 million, mainly due to the upturn in staffing and occupancy costs.

"The contribution from other income was lower by 25.2 percent at $39.7 million, this owing to a sharp run-up in provisions for bad debts."

Meanwhile, the 2008 report noted that domestic economic activity slowed in 2008, with a projected moderate contraction in real GDP, following estimated growth of 2.8 percent in 2007 and 4.6 percent in 2006.

The Bank said the accelerated downturn in economic activity over the second half of the year, culminated in a sharp rise in the unemployment rate, to more than 12 percent at the end of December from mid-year estimates of 8.7 percent and 7.9 percent in May of 2008 and 2007, respectively.

Just last week, the latest quarterly report released by the Central Bank indicated that for the first eight months of the fiscal year the deficit almost doubled to $173.4 million amid a firming of 4.6 percent in expenditure. This contrasted to a 4.2 percent downturn in revenue collections.

From the President’s desk….

"WE'RE OUT OF MONEY"

In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."

C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

Your monthly mortgage tip:

Secrets Lenders don't want YOU to know!

loanSecrets

With the growing uncertainty in the job market and overall economy, should you find yourself out of a job do not neglect to contact your banker.

Most lenders have the ability to work with clients who may be n the throes of catestrophic financial challenges. There are a myriad of options which they can make available to you to work with you through the diffucult times!

To find out how to get the best help from your banker, email us at info@xmloans.com

KNOW THE FACTS –BANKS ARE WILLING TO HELP YOU IF YOU ARE PROACTIVE WITH YOUR PROBLEMS!

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