EARLY projections indicate that the financial sector is expected to buckle under higher non-performing loans, as the haemorrhaging from COVID-19 is expected to escalate.

The projections done by the international auditing and management firm of KPMG, under the heading ‘Credit Risk Implications of COVID-19 Crisis’, estimate that non-performing loans could rise as high as 9.5 per cent, and 4.0 per cent at the lower end of the scale for March 2021. According to KPMG, “this would be a significant increase from the approximately 2.4 per cent recorded in February 2020”. The 9.5 per ent figure would represent about $12 billion using December 2019 figures of $136 billion credit by deposit taking institutions (DTI).

KPMG argues that the offering of moratoriums by financial institutions will allow these loans not to be classified as non-performing during the moratorium period. Hence, the projected rise in NPL will likely be dampened.

http://www.jamaicaobserver.com/business-report-daily-biz/financial-sector-to-buckle-under-higher-non-performing-loans-npl-because-of-covid-19-npl-could-rise-as-high-as-9-5-_195158