Jul 2010 Financial News

CBB report shows drop in consumer credit

Jul 26, 2010

DUE to a drop in income levels, as well as uncertainties surrounding the short- and medium-term future of the local economy, Barbadians have been seen to be borrowing less.

For the first four months of this year, the total amount of new consumer credit extended by commercial banks, for the purpose of transactions related to vehicles, furnishings, travel, home improvements & real estate, consolidation of debt, among others, was some Bds$12.1 million less than what had been recorded for the same period in 2009.

According to the Central Bank of Barbados’ (CBB) June 2010 edition of Economic and Financial Statistics, the total value of new business as it relates to consumer instalment credit extended by commercial banks operating here in Barbados was Bds$64 679 000, 15.8 per cent below the $76 576 000 extended for the same period last year.

The largest decline as it relates to the individual categories referred to above was seen in the area of debt consolidation, which dropped by $6.4 million. This was followed by a $5.02 million decline in debt for miscellaneous purposes, which, when added to decline in credit for debt consolidation, accounted for 94.3 per cent of total decline seen for the period under review when compared to that for 2009.

Slight declines were also seen in new commercial bank consumer credit activity as it relates to private cars, taxis and rented cars, commercial vehicles, as well as travel, while an increase was seen for motorcycles.

As it relates to home improvement and real estate activity, this was relatively on par with what was seen for the four month period in 2009, with $12.09 million in new business being recorded for January to April this year, slightly up from the $11.95 seen for the corresponding period last year.

An increase was also seen in the area of furnishings and domestic appliances, which grew from $198,000 to $271,000.

During his review of the economy for the first six months of the year, Governor of the CBB, Dr. Delisle Worrell, noted that domestic demand for credit continued to be weak, which has been a trend seen over the last year and a half.

Since the end of 2007, the Central Bank had been making a number of efforts to increase demand for credit, however, these proved to be unsuccessful, as figures for the last couple years have shown that this demand remains depressed, given the fact that, as mentioned before, individuals have been experiencing decline incomes, along with the fact that they remain sceptical about the economies, and therefore are not seeking to enter into unnecessary debt.


Source:
By Randy Howard
Barbados Advocate
Monday July 26, 2010

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