Tue | Dec 18, 2018

SLB non-performing loans skyrocket to over $11 billion - Auditor General report

Published:Wednesday | September 19, 2018 | 12:00 AM
Auditor General Pamela Monroe-Ellis

Over the five-year financial period 2012/13 to 2017/18, the Students Loan Bureau's (SLB) stock of non-performing loans skyrocketed from $1 billion to a little more than $11 billion, according to Auditor General Pamela Monroe Ellis in a performance audit of the entity.

The Auditor General's Department conducted a performance audit to ascertain whether the SLB managed its loan collection and enforcement activities to contribute meaningfully to the sustainability of the Revolving Loan Fund.

"The stock of non-performing loans (NPLs) rapidly moved to $11.4 billion (11,189 accounts) from $1 billion (8,489 accounts) over the five-year period 2012-13 to 2017-18," the reported stated.

As a percentage of total loans in repayment, NPLs increased to 58 per cent at February 2018 from 33 per cent at March 2013.

"We found that borrowers were fast becoming delinquent as evidenced by 62 per cent or $2.75 billion of loans due for initial repayment commencing January 2016, becoming non-performing within 12 months," the Monroe Ellis-led department reported.

The SLB blamed delinquency on unemployment, underemployment and migration, which the entity noted was as high as 70 per cent for some groups.

"Given that labour market conditions are outside SLB's control, we expected SLB to adopt an aggressive stance to collections and enforcement," the Auditor General said.

Monroe Ellis reported that the SLB did not provide for review a disaggregation of its loan portfolio and associated risks, or indicate any customised strategies to address delinquency among specific groups. Further, the Auditor General found SLB's guarantor system to be only partially effective, collecting only $35.8 million from 96 guarantors over the period 2010-2017.

In May 2018, SLB resubmitted to Ministry of Finance and the Public Service (MoFPS), a proposal previously submitted in 2012, for the amendment of the Students' Loan Fund Act for garnishment of beneficiaries' income and assets. The current Act provides for court action to recover non-performing loan amounts. The Auditor General said that as at July 2018, the SLB was awaiting the ministry's decision on the way forward.