Jamaica’s problem loans surge 50% in October

Borrowers are falling behind in their loan payments, with past-due loans in October 2025 surging over 50 per cent month-on-month, reflecting the onset of the economic fallout from Hurricane Melissa.

The delinquencies, captured in Bank of Jamaica (BOJ) data through to October, represent the fastest quarterly deterioration since the COVID-19 pandemic shutdowns of 2020. Past-due loans – those overdue by 30 to 89 days – jumped to $65 billion in October 2025 from $41.2 billion in September 2025. On an annual basis, these problem loans grew 25 per cent.

Loans unserviced for over 90 days, termed non-performing (NPLs), a major metric of loan health, rose to $44.5 billion in October from $42.9 billion in September, up about 4.0 per cent. The movement over 12 months, however, reflected 21 per cent growth.

The Bank of Jamaica has already forecast these problem loans to double in the short term due to the economic impact of Hurricane Melissa. The BOJ never revealed a figure, but based on the data it could move NPLs to around $86 billion. The current surge places hardships on regular Jamaicans but does not threaten the stability of the banking system. NPLs account for 3.0 per cent of $1.4 trillion in total loans across the commercial banking system.

HOUSEHOLDS

The loan deterioration is concentrated in consumer debt. Individual borrowers and households now account for $28.3 billion – nearly half of all past-due loans – and two-thirds of non-performing loans. This suggests that families are juggling mortgage payments, car loans, credit cards, and, for many young graduates, student debt obligations.

“Earning $300,000 a month is not livable at all for an adult in Jamaica, and I don’t even pay rent,” wrote someone on the platform X under the handle Kayjuanaa.

The Students’ Loan Bureau has offered three-month deferrals for borrowers affected by Hurricane Melissa, and there are calls for more comprehensive student debt relief. Banks have urged borrowers to discuss payment plans. Some have taken to social media to voice their inability to keep up with loan payments.

The ratio has been creeping upwards for years, fuelled by a double-digit rise in mortgage lending and aggressive consumer credit expansion via credit cards and microloans. To spur the COVID-19 recovery, some banks, flush with deposits and competing for market share, started offering quick online loans, and raising credit card available balances. A teacher, who asked to remain nameless, said he was initially given a credit card limit equal to his monthly salary. Over time, however, the balance ballooned to ten times his salary, without him requesting any adjustments..

DIASPORA

Perhaps an unexpected subset of the rise in problem loans involves overseas residents, who account for $19.5 billion to October – 30 per cent of all past-due loans – despite representing a small fraction of total borrowers. In September, past-due loans for overseas residents totalled $8.1 billion. In terms of NPLs, overseas residents account for $7.6 billion of the total, according to BOJ data.

Regulatory Responses

The Bank of Jamaica has already begun monetary easing, cutting its policy rate four times in 2024. The rate, which moved in 2021 from 0.5 per cent to a peak of 7.0 per cent, now stands at 5.75 per cent. But for many borrowers, these interventions may be too little, too late.

FINANCIAL CRISIS

During the so-called Global Financial Crisis of 2008, Jamaica’s NPLs, at $7.1 billion in June 2008, tripled to $21.8 billion by December 2010, then quadrupled to peak at $31.5 billion by December 2011. That crisis forced a fundamental rethinking of financial oversight, locally and overseas, ultimately leading to the banking sector’s adoption of forward-looking IFRS 9 accounting standards in 2017.

Those reforms proved their worth during the COVID-19 pandemic. When the virus hit in March 2020, NPLs stood at $23.2 billion and climbed, but never doubled from that time to the latest data. Experts argued that this was in part due to the regulatory buffers banks were forced to build, with coverage above 100 per cent of expected losses.

steven.jackson@gleanerjm.com