THE GROWING NUMBER of Barbadian couples calling it quits is pushing up the loan delinquency rate in at least one large financial institution.
The problem is particularly acute when it comes to the mortgage portfolio at the island’s second largest credit union, the City of Bridgetown Co-operative Credit Union (COB), where all loans that were more than three months behind moved from 11.90 per cent in the 2013 financial year to 14.40 per cent this year.
Chief executive officer of COB, Steve Belle, told the SUNDAY SUN that many couples were under stress in the economically tough times where unemployment was rising. Some partners were walking away from their commitments, leaving the other one to struggle with mortgage payments all on their own.
“It is understandable that people are under stress and it acts itself out in tensions between couples. We have found that we have increased incidents of people who are walking away.
“We can’t get into people’s domestic issues but all we have to do is make sure that in the assessment of credit and risks going forward that we take that dimension into consideration,” he said yesterday during a break at COB’s annual general meeting at the Lloyd Erskine Sandiford Centre, Two Mile Hill, St Michael.
COB had a loans portfolio of $298.2 million as at March 31, with mortgages, real estate and savings-secured loans representing 75 cent of those loans.
Loan delinquency stood at 14.4 per cent and the credit union’s top executive said information gathered from their collection staff showed that the major reasons for non-performing loans were “relationship situations”, unemployment and reduced income.
Even in the current environment, Belle stressed that the credit union was not going to throw members out of their homes in order to recoup funds, but it was working out other solutions such as refinancing so that members can keep the biggest investment they have made.
To help members who are falling behind in their loans, COB increased the cash flow of borrowers facing difficult times through debt consolidation. In addition, COB moved to reduce loan repayments by reducing interest rates and increasing loan repayment periods where appropriate.
Asked whether COB would follow some commercial banks that have put a hold on all lending to temporary public officers, Belle said such a move was not even being contemplated.
“We do not believe that you can destroy a person’s dreams. The economy is having its challenges but people still have to live and survive. People still have to feel that there is going to be a tomorrow and the day after that, and to stop a person from achieving their goals because there is a little tremor in the system, we feel that is a fundamentally flawed position.
“That is not what we are standing for. Every single case that comes before us we assess it based on the risk. So you could be a public officer and you can get a loan from us, and you could be in the private sector and don’t get the loan when we assess the risk,” the COB boss pointed out.