Cyprus Mail

NPLs drop by €687.6m in June and €1bn in Q1

Non-performing exposures in the Cypriot banking system fell by €687.6m in June, to €24.7bn, compared to the month previous month, mainly on a drop in the delinquent loans of companies, the Central Bank of Cyprus said.

Still, the overall non-performing loan rate remained almost unchanged at 49.4 in June, compared to 49.7 in May, as total loans fell by almost €1.1bn, to below €50bn, for the first time since the supervisory authority introduced the current methodology in December 2014, the Central Bank said in a statement on its website on Thursday. In the second quarter of 2016 alone, total non-performing loans fell by almost €1bn, accompanied by a drop in total facilities more than three times as much. Since the end of 2014, non-performing loans fell by almost €2.6bn, or almost one tenth.

The drop in non-performing loans “is the result of increased repayments, restructurings successfully completing the observance period and migrated to performing facilities, write-offs, and loan settlement through exchange with immovable property ultimately aiming for quicker collection through their sale,” the Central Bank of Cyprus said. “There is an improvement in the factors reducing non-performing facilities, e.g. collections on restructured facilities and amounts transferred to the performing facilities due to successful completion of the observance period. However, there is still a long road towards the resolution of the problem”.

The amount of non-performing loans extended to companies fell by €505.8m in June, to almost €12bn, which includes €8.5bn in bad loans of small and medium size enterprises that fell by €140.1m in a month, the supervisor said. Household non-performing loans dropped by €202.1m, to €12.3bn. Non-performing loans of financial corporations increased in June by €14.7m, to €359.4m.
The non-performing loan ratio for companies and households was 58.3 per cent and 56.3 per cent respectively in June.

The amount of loans with 90 days or more in arrears dropped by €847.3m, to €18.4bn, again mainly on increased compliance by companies, the Central Bank data shows. The amount of restructured facilities fell by €250.8m, to €13.7bn, including total exposures worth €10.2bn which remain classified as non-performing for a period of 12 months.

“Banks continue their intensive efforts towards restructuring non-performing facilities for the cases where viable restructurings are possible,” the Central Bank said. “At the same time, the success of some restructurings depends on the prospect of disposing the collateral within the specified timeframe”.

In the second quarter of the year, banks completed 7,785 loan restructurings out of a total of 20,405 applications, the supervisor said. Banks rejected a total of 1,171 applications while 11,449 “were carried forward to be examined in the next quarter”.

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