BAD debt at Jamaican commercial banks climbed in December while loans outstanding fell, after the rise in non-performing loans and the fall in loan stock eased in September following a 18-month period of deterioration.

According to the Bank of Jamaica (BOJ) in its quarterly monetary policy report (QMPR) for the December quarter, “the quality of the private sector loan portfolio deteriorated marginally during the review quarter”.

“The ratio of past due loans to total loans (for commercial banks) was 5.4 per cent at the end of the review quarter compared to 5.2 per cent at end-September 2010,” said the report.

BOJ data showed total loans at end of December 2010, stood at $251.4 billion, which means that past due loans, or non-performing loans — loans that have not been serviced for over three months — climbed to $13.5 billion from $10.8 billion a year earlier and $13.1 billion as at September 30, 2010.

At the end of 2010, total loans outstanding was lower than year-earlier levels of $256.4 billion but it was higher than the $245.8 billion in total loans recorded for end September 2010.

During the three months to September 30, 2010, the stock of outstanding loans and advances to the private sector increased for the first since the March quarter of 2009.

The BOJ’s QMPR said that “manufacturing, construction and land development and agriculture and fishing were the sectors which largely accounted for the overall decline in loan quality”.

Moreover, loans to those sectors mostly fell.

At the end of December 2010, total commercial bank loans to the agriculture production sector fell from year-earlier levels by 24 per cent to $4.35 billion, but the biggest decline, in dollar terms, was to the tourism sector which fell from $39.6 billion to $32.6 billion.

Loans outstanding for land development fell 56 per cent to $545.3 million but loans to construction climbed seven per cent to $19.7 billion.

Manufacturers of food, drinks and tobacco had net repayment of loans of $654.7 million, which brought down loans outstanding by 26 per cent to $1.9 billion while total commercial bank loans to the manufacturers of chemicals and chemical products fell 31 per cent to $649 million.

The sector with the largest increase in loans, in percentage terms, was manufacturing of furniture, fixtures and wood products — it rose 40 per cent to $650 million.

Personal loans rose four per cent over the year to December 31, 2010 to $94.6 billion while the distribution sector had net take up of loans of $2.3 billion, which brought total loans outstanding to the sector to $27.8 billion.