ENTERTAINMENT loans increased three times faster than the growth of total commercial bank loans year-on-year, according to data from the Bank of Jamaica (BOJ).

The entertainment sector had $506.8 million in outstanding commercial bank loans up to October 2009 (latest data) which was 21.8 per cent more than 12 months prior.

Over the same period, total outstanding loans grew 6.6 per cent to $255.48 billion, which was below inflation at 8.1 per cent between January to October, according to the Statistical Institute of Jamaica (Statin). Banks have stated that the ongoing recession has affected the growth of their loan portfolio.

Despite the recent rise in entertainment loans, however, over the past decade it has trended below most other sectors. Between December 1999 and October 2009, entertainment loans grew 234 per cent from a low of $151.3 million, but over the same period, total commercial bank loans grew six-times from $36.7 billion to $255.48 billion. Additionally, loans to the transport, storage & communication sectors jumped 4.5 times to $11.8 billion while tourism sector loans jumped 10.4 times from $3.5 billion to $40.1 billion.

Economist Dr Vanus James, who led a World Intellectual Property Organisation (WIPO) study, stated that entertainment was not adequately funded. The WIPO data showed that US$1 was invested in the core copyright sector which includes entertainment earnings of J$6.18 in value-added 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.

Entertainment loans 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.

Last year, the BOJ Statistical Digest misprinted that entertainment loans jumped by nearly J$1 billion (202 per cent) in a single month to record levels, outpacing all other sectors of Jamaica’s economy. The figure was corrected in its April publication as $484.1 million.

The two largest commercial banks, Scotia Group Jamaica (SGJ) and National Commercial Bank of Jamaica (NCBJ) saw the greatest increase in total loans. NCBJ loans (net of provision for credit losses) grew seven per cent to $88.2 billion over its financial year ending September 2009.

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

The SGJ ended its June quarter 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 SGJ, 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.