Based on figures released recently by the Bank of Jamaica (BOJ), the value of non-performing loans (NPL) in the Jamaican financial system skyrocketed to J$14.6 billion over the three months to June 30, 2009, while the ratio of bad debt to total loans in the system has reached levels that have not been seen since 2003.
Non-performing loans (loans on which no payment has been made in excess of three months) grew by $3.9 billion dollars during the three months ended June, almost twice what it was at the end of June 2008, when the figure was $7.4 billion.
Notably also, there was a drastic slowdown in loans disbursed during the June quarter – total loans in the system grew by just $3.3 billion (i.e. less then than the increase in bad debt).
Thus, the ratio of non performing loans to total loans across the entire financial system stood at 4.1 at the end of June – but still below the prudential tolerance limit of 10% – a benchmark set by regulators to measure the health of financial institutions’ loan portfolios.
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