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Loan restructurings decline to a year low

Loan restructurings in the Cypriot banking sector declined to their lowest level this year, as the banks enter into the more difficult cases of non-performing exposures (NPEs), which in July declined marginally to €22.63 billion, marking a reduction of 0.06 billion compared with the previous month.

According to figures released by the Central Bank of Cyprus (CBC), loan restructurings declined by €129 million to €12.68 billion compared with the previous month. Restructurings have declined to a year-low marking a reduction of €0.75 billion compared with January 2017.

In July NPEs declined marginally to €22.36 billion compared with €23.42 billion last month. NPEs amounted to 45 per cent of total loans which declined to 49,46 billion in July, marking a reduction of €0.36 billion compared with June 2017.

According to the CBC figures, the monthly reduction is mainly attributed in the migration of restructured non-performing loans to the performing loans portfolio. Under the European Banking Authority Directive, a restructured loan should be considered as non-performing for at least 12 months.

Compared with July 2016, NPEs marked a sizeable reduction of €2 billion or 8.1 per cent.

The banks’ accumulated provisions remained unchanged to €10.47 billion resulting in a coverage ratio of 47 per cent over the total NPEs. Compared with January 2017 accumulated provisions marked an increase of €625 million or 6.35 per cent.

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