Non-performing exposures (NPEs) in the Cypriot banking system declined to 40.3 per cent of total loans in the end of June, marking a reduction of €3.28 billion compared with the end-of March 2018, and €10.7bn or 39.1 per cent since the end-of December 2014, the Central Bank of Cyprus (CBC) said on Monday.
On a quarterly basis, the reduction in the stock of NPEs is mainly attributed to the sale of an NPE portfolio amounting to €2.8 billion by Bank of Cyprus, the island’s largest lender.
The coverage ratio declined marginally to 48.3 per cent at end-June 2018 compared with 48.6 per cent at the end of March, the CBC said.
“The downward trend in NPEs can be attributed mainly to the sale of loans, the reclassification of loans as debt instruments held for sale, the successful completion of the probation period of restructured loans and their reclassification as performing, write-offs, repayments and settlement of debt through swaps with immovable property that is expected to be sold with the aim of a faster cash collection,” the CBC said in a commentary.
The analysis of additional data with respect to fixed-term loans, the CBC added, shows that there has been an improvement in the factors contributing to the reduction of NPEs e.g. collections on restructured facilities and amounts transferred to performing facilities due to successful completion of restructurings by the end of the observance period.
According to the CBC, household NPEs amounted to €10.21bn or 61.41 per cent of total NPEs at the end of June, while corporate NPEs amounted to €6.41bn or 36.9 per cent.
Total restructured facilities at the end-June 2018 amounted to €9.363m, of which €6.4m continues to be classified as NPEs, partly due to the definition of NPEs, the CBC said.