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    Central Bank of Bahamas Issues Bank Lending Conditions Survey Report

    November 02, 2020

    The Central Bank of The Bahamas published a report on the results from the bank lending conditions survey. The results from the survey suggest that, during the first half of 2020, the demand for credit reduced sharply across all markets, as application volumes fell to historically low levels. The contracted domestic economic environment, dominated by the COVID-19 pandemic accounted for this outcome. Notwithstanding, the average rate of approval on loan applications remained favorable across all categories. Loan eligibility and debt-servicing abilities of borrowers worsened in the review period. Most banks expect conditions to deteriorate or remain unchanged in the coming year.

    The results highlight that appetite for consumer credit maintained its dominance. However, the volume of such requests still declined broadly, except for interest in purchases of commercial vehicles. Despite the downturn, the average approval rates remained elevated at 87.2%, the highest since the second-half of 2016. In the mortgage sector, financing demand for already built homes remained dominant, but interest in new construction was the only category with overall increased applications. The commercial credit requests reduced by 9.7% year-on-year, although increased applications were measured compared to the six months to December 2019. A lesser fraction of the applications were approved vis-à-vis the first half of 2019, but the acceptance rate held steady in comparisons to the second half of 2019.

    The Bank Lending Conditions Survey contains 12 questions on lending to the private sector, seeking information on the number of loan applications received, approved, and denied. Thus, the survey provides a perspective on the demand for credit. The survey participants are also asked about their views on changes in lending conditions one quarter to the next.

     

    Keywords: Americas, Bahamas, Banking, COVID-19, Credit Risk, Mortgage Loans, Central Bank of Bahamas

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