Cash-strapped Bermudians are struggling to pay back loans, the latest figures from the Bermuda Monetary Authority (BMA) reveal.

The number of loans classed as “non-performing” by the island’s financial watchdog is continuing to rise.

A BMA report said: “Non-performing loan balances relative to total loans continue to steadily grow each quarter, rising to 11.7 percent during the third quarter, up from 11.4 percent in Quarter 2 and 10.2 percent from a year earlier.”

The report, for the third quarter of last year, added: “Improvements from new lending appear limited since the rise was primarily driven by declining lending activity, down 1.8 percent, as non-performing loans, net of provisions, remained virtually flat — up 0.2 percent.”

And lending institutions have braced themselves by increasing loan loss provisions “significantly” — up 7.4 percent.

The report said: “The rise exceeded the growth on non-performing loans, up two percent, during the quarter, contributing to an increase in the stock of provisions relative to total loans to 3.2 percent.”

It added that the corresponding figure for Quarter 2 last year was three percent.

The BMA report also outlined the types of loans made by lenders.

It said that the majority of loans in the third quarter of 2013, 66.3 percent, were real estate related, up 1.3 percent on the previous quarter, while lending to other sectors, including “other personal loans” grew by one percent to 9.3 percent compared to the previous quarter.

Loans categorised as “other loans”, however, dropped by 2.8 percent to 9.7 percent compared to Quarter 2.

The BMA report added that banks continued to cut investments at a higher rate than any other asset class — including lending, which fell by 1.8 percent.

But the report said: “Sovereign investments as a percentage of total investments grew to 40.4 percent (Quarter 2 2013, 39.3 percent) during the quarter, representing a year-on-year increase of 43.9 percent.”

And it added: “Over the past year, the investment book has shown evidence of reallocation, with a shift from investments held with banks to sovereign investments.”

The report also said: “The aggregate asset quality of the banking book continues to deteriorate, albeit a slower pace than in the past.

“Loan loss provisioning — up 7.4 percent — grew for the fourth consecutive quarter and increased from 22.2 percent in Quarter 2 to 23.3 percent relative to non-performing loans, up two percent.”