Non-Performing Loans in Cyprus decrease, restructured loans remain a concern

The Central Bank of Cyprus (CBC) on Wednesday reported a decrease in non-performing loans (NPLs) at the end of February 2023.

NPLs decreased by approximately €60 million compared to the previous month, resulting in a decrease in the percentage of NPLs to total loans, which now stands at 9.3 per cent after reaching 9.5 per cent in the previous month.

Data from the CBC shows that the total amount of NPLs decreased to €2.26 billion at the end of February 2023, down from €2.32 billion in the previous month and €2.30 billion at the end of 2022.

Out of the €2.26 billion in NPLs, €1.01 billion consists of restructured loans that are still classified as non-performing, as per the directive of the European Banking Authority (EBA).

In addition, the total amount of restructured loans stands at €2.66 billion.

Total lending in Cyprus increased to €24.41 billion at the end of February 2023, up from €24.30 billion in the previous month.

What is more, the CBC data also reveals that the banks’ provisions for NPLs increased to 48.4 per cent, a total of €1.20 billion, up from 47.2 per cent in the previous month.

In terms of corporate loans, there was a decrease in February 2023 to €939 million (7.8 per cent of total loans) from €968.59 million in the previous month.

Out of this amount, €825 million are loans to small and medium enterprises, of which €395 million are restructured loans that remain classified as non-performing.

The coverage index for corporate NPLs is 64.7 per cent, and for small and medium enterprises, it stands at 64.6 per cent.

Finally, household NPLs totalled €1.26 billion in February 2023, slightly down from €1.28 billion in the previous month, with a coverage ratio of 35.8 per cent.