The Caribbean Development Bank believes non-performing loans may continue to plague regional commercial banks this year.
The Barbados-based regional institution made this projection in its 2010 annual report where it noted that activity in the financial sector should pick up in line with the projected recovery in output and improvement in foreign inflows.
However, it was noted that “with the expected lagged recovery in employment, a higher incidence of non-performing loans may remain a feature of commercial banks’ loan portfolios, which require strong risk management on their part and close supervision by the authorities”.
Earlier this year Central Bank of Barbados Governor Dr DeLisle Worrell said he was not worried about the rising level of non-performing loans in Barbados.
At the end of March, available data showed that among Barbados’ five commercial banks, the percentage of non-performing loans stood at 10.7 per cent; in Trinidad and Tobago it was 5.4 per cent, and in Jamaica it was 3.9 per cent.
Two weeks ago, Trinidad and Tobago’s Central Bank Governor Ewart Williams said the economic downturn had a significant effect on loan delinquency, which moved from one per cent as at the end of 2008 to 5.5 per cent in 2011.
CDB officials also noted that regional authorities were expected to further strengthen supervisory and regulatory frameworks related to the non-bank financial sector and continue to collaborate on plans to resolve the CL Financial group issue with minimal fiscal impact.
The CDB said further that Caribbean economies should return to modest levels of growth this year.
