CommercIal banks with $257.2 billion in outstanding loans at the end of September had benefitted from a 60 per cent spike in construction loans but saw a sluggish personal loans market over 12 months up to September 30.

Total commercial banks loans increased 10.3 per cent over twelve months despite the recession.

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

Over 12 months, construction and land development loans jumped from $12 billion to $19.3 billion or 60 per cent; agriculture loans increased 23 per cent to $4.2 billion; Government service loans jumped 11 per cent to $34.3 billion; tourism loans jumped by 12.7 per cent; personal loans (which includes car and home loans) was amongst the most sluggish categories up 3.1 per cent to $90.3 billion. In previous years, personal loans increased the greatest, however, the bankers have noted that the effects of economic downturn would cut personal loans. The sector with the greatest cutback in loans was manufacturing, which decreased its outstanding loans by 6.5 per cent to $8.6 billion.

The largest two commercial banks Scotia Group Jamaica (SGJ) and National Commerical Bank of Jamaica (NCBJ) were the greatest beneficiaries of the 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.