TOTAL outstanding loans issued by commercial banks in October declined to the lowest level since January, albeit at $255.48 billion total loans were still up 6.6 per cent year over year, according to the Bank of Jamaica (BOJ).

The increase in total loans is trending below inflation which for the calendar year to October was 8.1 per cent according to Statistical Institute of Jamaica (Statin).

Despite the decline, the construction and chemicals sectors saw annual and monthly increases in outstanding loans.

Construction and land development increased to $20.5 billion in October 2009 from $19.3 billion in September 2009 whilst chemicals and chemical products total loans grew to $1.39 billion in October 2009 versus $131 million in September 2009.

The immediate past-president of the Jamaica Institute of Engineers Joseph Aryee said yesterday that “there are not many new projects (but that) people are trying to finish the jobs they have started and need financing”. There is no sense leaving the job half-way done, he said, adding that 2010 would be difficult year for the construction sector.

“It will be slow because of the current interest rate….people are not willing to borrow and go into new (projects) because the market is slow and therefore the prospect of selling and paying back is not going to be very bright. So you get yourself locked up if you go into borrowing,” he said.

The Business Observer was unable to contact the president of the Masterbuilders Association for comment up to print time.

The largest two commercial banks Scotia Group Jamaica (SGJ) and National Commercial Bank of Jamaica (NCBJ) saw the greatest increase in total loans.

National Commercial Bank of Jamaica’s (NCBJ) loans (net of provision for credit losses) grew seven per cent to $88.2 billion over its financial year end September 2009.

“NCBJ had the largest market share of net loans, recording growth of 25 per cent over the prior year, exceeding the industry growth of 20 per cent,” stated NCBJ in its investors release citing Bank of Jamaica Commercial Banking Industry review (June 2009) data. Its non-performing loans totalled $2.3 billion as at September 2009 which represented 2.61 per cent of the gross loans compared to 2.34 per cent as at 30 September 2008.

“We have enhanced our delinquency management and loan origination processes to proactively and aggressively monitor our loan portfolio in the current economic environment,” stated NCBJ in its investor release accompanying the results.

NCBJ reported a net profit of $10.2 billion for the year ending September 2009, a 18 per cent increase over the year prior. The banking segment contributed operating profit of $9.5 billion.

The SGJ ended its June quarter results with $93 billion in performing loans up $13 billion, or 16 per cent, over the previous year, with growth coming mainly in the commercial loan portfolio.

“That is the result of strong growth in our loan portfolio, particularly the commercial portfolio, and also our investment portfolio,” Wayne Powell, executive vice-president of branch banking and retail management of Scotia Jamaica, had said previously at an investor briefing. SGJ reported net income of $3.1 billion for the three months ending July 31, 2009, a 37 per cent increase above the corresponding period last year.