The Central Bank of Aruba released its Ease of Lending Survey for the third quarter of 2024, indicating that commercial banks’ sentiment on credit conditions turned more positive after three quarters of declining optimism. The overall (unweighted) credit conditions index rose to 102.2 from 101.1 in the second quarter of 2024, supported by stronger assessments of both current credit conditions (102.6) and expected future conditions (101.7). Improved sentiment was driven mainly by business lending, with the current business credit conditions index rising to 103.4 from 100.8 as banks reported a higher proportion of approved business loans and greater willingness to extend business credit. Business loans (resident stock only) increased to Afl 1,938.8 million at end-September 2024 from Afl 1,896.9 million at end-June, while the current index for individual loan conditions fell to 101.6 from 102.5 despite individual loans (resident stock only, excluding mortgages) rising to Afl 456.2 million from Afl 440.4 million. Demand drivers included vacation loans and debt refinancing for individuals and commercial real estate for businesses, while supply-side influences centred on funding costs and fund availability, alongside higher excess liquidity (up Afl 43.3 million since end-June). Supplementary data in the report also pointed to lower loan pricing, with weighted average interest rates on new individual loans falling to 6.3% from 6.5% and on new business loans to 6.0% from 6.6%, while the weighted average interest rate on new deposits remained at 3.1%. For the fourth quarter of 2024, banks expected further improvement in business loan conditions (future business index 103.4 versus 99.2) but a weaker outlook for individual loans (future individual index 100 versus 101.8), with cash flow shortages and vacationing highlighted as key demand factors and risk appetite and funding costs as important determinants of credit supply.

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