Entertainment loans grow seven times faster than total loans

BY STEVEN JACKSON Observer writer

Sunday, March 14, 2010

ENTERTAINMENT loans increased seven times faster than the growth of total commercial bank loans in 2009, according to data from the Bank of Jamaica (BOJ).

Entertainment loans issued by commercial banks grew 28 per cent to $530.8 million whilst the total stock of commercial bank loans grew four per cent to $256.4 billion up to December 2009 (latest data) compared with 12 months prior. The growth in outstanding entertainment loans actually beat calendar inflation of 10.2 per cent, according to the Statistical Institute of Jamaica (Statin).

Despite the recent rise in entertainment loans, historically it has trended below the growth in total commercial bank loans. Specifically, between 1999 and 2009 entertainment loans grew 350 per cent from a low of $151.3 million, while total commercial bank loans grew six times from $36.7 billion to $256.4 billion. Additionally, construction loans increased 12 times from $1.5 billion to $18.4 billion, tourism sector loans jumped 11 times from $3.5 billion to $39.6 billion and government services loans jumped seven times to $33.9 billion.

Entertainment loans still comprise 0.2 per cent of total loans despite the core copyright industry contributing 1.7 per cent of gross domestic product (GDP). The core and partial copyright industries collectively contribute 4.8 per cent to GDP.

Economist Dr Vanus James, who led a World Intellectual Property Organisation (WIPO) study entitled "The Economic Contribution of Copyright-Based Industries in Jamaica", stated that the entertainment sector was not adequately funded. The WIPO data showed that for every US$1 ($89.5) invested in the core copyright sector (which includes entertainment) J$6.18 in value-added was earned versus J$1.49 for cable and communications including cellphones.

"...It stands to reason that the country is underinvesting in the sector and the country cannot afford this," James stated about the study published in August 2007.

The two largest commercial banks, Scotia Group Jamaica (SGJ) and National Commercial Bank of Jamaica (NCBJ) both saw their loan portfolio (net of credit losses) grow 4.5 per cent over their first quarter to $92.7 billion and $87.9 billion respectively. Banks have stated that the ongoing recession has affected the growth in total loans from 26 per cent in 2008. NCBJ and SGJ each recorded net profit of $2.7 billion for the first quarter, up 16.3 per cent and 12 per cent respectively over the prior year's first quarter. The first quarter for NCBJ and SGJ end December 2009 and January 2010 respectively.

Did you watch American football's Super Bowl on Sunday?
	Yes, but just for the advertisements
	Yes, just for the game itself
	Yes, for both the game and advertisements
	No, I did not watch the Super Bowl.

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