More people are falling behind with their mortgage and loan repayments as the effects of the economic downturn bite deeper.The latest analysis of the Island’s banking sector by financial regulator the Bermuda Monetary Authority noted a “sharp increase” in non-performing loans during the last three months of last year.Non-performing loans - in which borrowers were 31 days or more behind with repayments - represented 5.7 percent of the total combined loan book of Bermuda’s banks, compared to 3.7 percent at the end of September.The figure had hovered around the three percent mark since the end of 2009, but increased significantly in the fourth quarter.And it would have been even higher, but for a substantial write-off of non-performing loans that were no longer considered collectable. Loan provisions came down sharply, from 36.1 percent to 18.8 percent, as a result of the write-offs.The BMA, in its Quarterly Banking Digest for the fourth quarter of last year, uses combined figures from Bermuda’s banks. Nearly two-thirds of the loan book for the sector is made up of real estate-related loans.The loss of more than 2,000 jobs over the past two years, according to Government statistics quoted in the National Economic Report for 2010, and more lay-offs in 2011, have battered the community’s purchasing power. Retail sales volume, adjusted for the rate of inflation, have fallen for 33 months in succession, according to the Department of Statistics’ Retail Sales Index.Butterfield Bank, HSBC Bermuda and Capital G have all noted borrowers’ increasing problems with loan repayments in their annual results statements in recent weeks.In its results for 2010, Butterfield said non-accrual loans totalled 3.9 percent of its $4 billion loan book, a figure that fell to 3.7 percent in the first quarter after the bank settled a troubled hospitality loan earlier this year.HSBC Bermuda said that loans classed as “performing” fell from 97.5 percent at the end of 2009 to 91 percent at the end of last year. It added that 4.6 percent were rated “substandard” and 4.4 percent “non-performing”.Capital G Bank, in its earnings statements, said it had foreclosed on some properties in 2010, as borrowers were hit hard by the recession. The total value of foreclosed properties held by the Bank at the end of 2010 was $7.7 million, compared to $2.6 million at the end of 2009.It added that impaired loans had doubled from $1.5 million to $3.1 million last year, but represented only 0.39 percent of its loan book.The BMA analysis also indicated, however, that the health of Bermuda’s banks is improving.Total assets of the banks rose 4.9 percent in the fourth quarter to $23.4 billion, and 8.1 percent from the $21.6 billion total at the end of 2009.The institutions also saw a 5.4 percent increase in total deposits to $19.6 billion during the fourth quarter. Deposits were up 6.3 percent from $18.5 billion year on year. Primary drivers of the fourth-quarter deposits rise were US dollar demand deposits, which saw a 20.9 percent growth in the three-month period.The sector’s capital position also improved as risk asset ratio improved for the fourth successive quarter, to 25.6 percent from 20.2 percent.But profitability declined in the fourth quarter with return on equity decreasing to 4.5 percent from 6.1 percent in the third quarter. This was partly down to the cost of bad debt provisioning.