Cyprus Mail

Co-ops reduce NPLs stock below €6 billion

The Cooperative Credit Institutions (Co-ops) have stepped up the pace of restructurings, reducing their non-performing loans below €6 billion six months before the target date.

Nicolas Hadjiyiannis, the Cooperative Central Bank`s Chief Executive Officer, has told CNA in an interview that the Coop sector has reduced its non-performing exposures (EBA definition that keeps a restructured loan under probation for one year) to €7.25 billion.

“We are well within our targets for a loan restructuring over €1 billion in 2016 and we are very pleased with the huge progress achieved,” he said, adding that the Co-op sector has achieved restructurings totalling €1.4 billion or 13,000 accounts in the past 12 months.

He said June was the best month with restructurings totalling over €125 million, whereas loan restructurings in the second quarter of the year reached €340 million.

Consequently restructurings in the year`s first half reached €660 million, he added.

The 90 DPD ratio declined in June 2016 to 48.25% of total loans, equalling the levels of 2014.

Hadjiyiannis said the Co-op restructuring unit settles 1,000 accounts monthly which in their largest majority maintaining their relationship with the Co-op sector, which means continued cash flow.

“At the end of June and for the first time NPLs have been reduced below the €6 billion barrier which declined to €5.95 billion, achieving the target we set last November six months earlier,” Hadjiyiannis added.

He said that the difference between the NPLs (loans 90 days past due) and the European Banking Authority`s non-performing exposures (NPEs) definition exceeded €1.3 billion or 10% by end-June. Under the EBA`s definition, restructured loans must remain in the NPEs stock for one year before they return to the performing loans stock, freeing capital and boosting the bank`s profitability.

“Therefore we have loans amounting to 10% which in a period between one and three years will be removed from the NPE stock,” he said, adding that monthly the Co-op sector will register increased number of loans returning the performing loan portfolio.

Hadjiyiannis said the Coop sector has increased its capital adequacy ratio recording operational profits and liquidity that amounts to €3.7 billion and own capital of €1.3 billion. The coverage ratio amounts to 50%, he added.

Concerning loan provision, Hadjiyiannis said new loans reached €100 million in the fist half of 2016, doubling the performance of first half of 2015.

“We see an interesting demand for new credit facilities from the Co-op sector as an alternative to the banking system,” he concluded.


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