Consumer confidence is yet to return to the banking industry in Barbados, a senior banker admits.
There was demand from large commercial entities for loans to invest in solar energy in 2012, but the call for mortgages and other “big ticket items” remained limited, according to Barbados Bankers’ Association president Horace Cobham.
However, Cobham told BARBADOS BUSINESS AUTHORITY in a recent interview that there was an increase in the number of individuals requesting debt consolidation.
“That tells me there is not that confidence. It tells me that people are hunkering down for the long haul. It is that anecdotal evidence that we use to gauge what to expect in terms of our market and right now because of that we are not seeing much in the way of growth,” Cobham.
Consumer confidence is measured based on demand for credit both in the number of people going forward as well as the size of loan requested and what they are seeking to do.
“A comparison between 2011 and 2012: I would say that 2012 from a confidence perspective probably got worse. All in all, the loan market remained soft. I am not aware that we had any growth in the loans market. It is even more so in the commercial banking market. I am not aware that businesses have done a whole lot in 2012,” he said, noting that most of them were taking loans to improve their efficiency.
In 2011 the senior banker said after nine months the loan market had remained soft due to shortened work week and people were remaining cautious. Not much has changed since then.
“The bigger companies are doing something but that is not far and wide. At the personal level, we are seeing consumers taking smaller loans and it remains for purposes of doing a little something they want to do but generally we are seeing greater request for debt consolidation,” he stressed.
With respect to repayment of loans for both individuals and commercial entities, banks have had to do “some restructuring” for them, Cobham revealed. He added that some individuals were seeking for reduction in loan payments and to have the length of the loans extended.
Although there may not have been an improvement in the level of consumer confidence in the industry across the board, general manager in corporate and commercial credit at Republic Bank (Barbados) Limited Sean Husain said that bank saw some progress.
He explained that following a campaign by the bank late last year he concluded that consumer confidence had improved somewhat when compared to the previous year. However, the bank was yet to see any significant improvement in the repayment of loans.
“I would say that we have come a little way. At that point we did a little better than we did the year before which goes to show that people feel a little better about their prospects to pay debts. They approach you to borrow. So I would say from that perspective yes, confidence is returning,” he said.
