Major progress on NPL front
The four systemic banks reduced their bad-loan stock by 22% in the first half of the year
Greece’s four systemic banks recorded a significant 22% reduction in their nonperforming loans in the first half of the year compared to a year earlier, during a period when most other sectors suffered a financial blow.
The NPLs they have in their financial reports – both within and outside the country – amounted to 61.1 billion euros at the end of June, compared to €78.4 billion in the January-June 2019 period on a group level. There was a similar reduction of bad loans within Greece alone, as their sum came to €56.8 billion at the end of the year’s first half, down from €73.2 billion a year earlier.
The reduction achieved is associated with the completion of transactions before the outbreak of the coronavirus pandemic, but also with their own activity – i.e. the arrangement of bad loans that stemmed the creation of new NPLs, while the trend toward the reduction of bad-loan stocks seen in the last few quarters was consolidated.
Eurobank achieved the biggest NPL reduction in the first half of the year, amounting to €8.1 billion, mainly thanks to the completion of the concession of the €7 billion Cairo portfolio. Eurobank’s NPL index is at 17.2% in Greece, taking its bad loans down to €6.2 billion.
Alpha Bank was a distant second, as it reduced its NPL stock by €3.5 billion. This was primarily thanks to the sale of the Neptune portfolio of corporate bad loans. The lender’s management is targeting the reduction of its nonperforming exposures (NPE) index from 43.5% at end-June to 24% by year-end through the Galaxy transaction that will securitize loans worth €10.5 billion.
National Bank reduced its bad loans by €2.9 billion, taking its NPE index down to about 30%. After the sale of packages adding up to €3.7 billion last year, it is eyeing the concession of the Marina and Danube portfolios, worth €300 million and €200 million respectively.
As for Piraeus Bank, it saw its NPL stock shrink by about €2.8 billion, taking its sum to €23.3 billion on a group level, of which €22.6 billion is in Greece.