Jamaican consumers are managing their debt, says NCB

National Commercial Bank Jamaica, NCB, has seen only moderate movement in its non-performing loans amid the near one-third jump in past-due consumer loans and residential mortgages reported across the wider banking sector.

“We are not seeing the percentage delinquency in our consumer portfolio. I attribute that to the fact that the economy is growing, unemployment is dropping, and we are not seeing the Jamaican consumer becoming over-leveraged,” said NCB Jamaica CEO Bruce Bowen.

The total non-performing loans for NCB Financial Group, which includes the commercial bank, was estimated at 4.1 per cent of the group’s $633 billion loan portfolio. Nominally, the banking group’s NPLs rose by $1.7 billion to $26.3 billion.

NCB’s NPLs are at “still at 4.1 per cent compared to last year and the loan portfolio would have grown since then. So from a quality perspective ... there was no deterioration in the portfolio,” said Malcolm Sadler, chief financial officer of NCB Financial Group Limited.

Bowen said that as is naturally the case in times of rising interest rates, persons with variable loans pay more to service their debt. Additionally, some new borrowers will find it more difficult to qualify for loans.

The average car loan has increased by two to three percentage points relative to three months ago, Bowen said. NCB currently offers loans for new cars at 12.4 per cent according to its car loan calculator. Before COVID-19, car loans were issued closer to half that level.

Secured business loans are hovering around 12 per cent, up from 7.0 per cent three or four years ago, he added.

“What we are seeing is that with interest rates high … at some point, it is going to pull back investment,” he said. “I think if that slows the economy, then it would create an issue. But right now we are not seeing a problem.”

The pandemic led to health and economic resets for much of the financial world. And central banks are still trying to coral inflation back in line with targets. Interest rates are expected to stay elevated until central banks around the world, including Jamaica, feel sanguine enough about prices to loosen monetary policy and cut policy interest rates.

Across the financial system, loans that are not serviced for one to three months are classified as past-due loans. After 90 days, they are then categorised as NPLs.

Past due consumer loans, that is, for ‘individuals and households’, inclusive of residential mortgages, were estimated at $26.6 billion as of March 2024, according to industry data published by the Bank of Jamaica. That figure jumped 30.6 per cent in a year from $20.4 billion in March 2023. It was the highest annual rise recorded for past due loans since 2017. Consumer loans is the largest category of bank loans.

NCB Financial Group reported last Friday that second quarter profit for shareholders rose to $5.6 billion, compared to restated profit of $3.2 billion. The conglomerate’s largest holdings are commercial bank NCB and insurance group Guardian Holdings.

business@gleanerjm.com