NPLs de­cline but still 45% of to­tal loans

Financial Mirror (Cyprus) - - FRONT PAGE -

Non- per­form­ing ex­po­sures (NPEs) in the Cypriot bank­ing sys­tem de­clined be­low EUR 22 bln in Fe­bru­ary but re­main at 45.3% of to­tal loans, ac­cord­ing to the lat­est data pub­lished by the Cen­tral Bank of Cyprus (CBC).

In Jan­uary, NPEs spiked by al­most EUR 2 bln com­pared with De­cem­ber 2017, this was due to the i mpact of the In­ter­na­tional Fi­nan­cial Re­port­ing Stan­dard 9 which forces banks to recog­nise ex­pected losses.

Ow­ing to the IFRS 9, ac­cu­mu­lated pro­vi­sions for credit losses reached a new high since 2014, amount­ing to EUR 11.84 bln which cor­re­sponds to a cover­age ra­tio of 54% of to­tal NPEs, the CBC said.

In ab­so­lute terms, NPES de­clined in Fe­bru­ary by EUR 120 mln or 0.55% to EUR 21.99 bln com­pared with EUR 22.11 bln in Jan­uary.

To­tal loans in Fe­bru­ary regis­tered an in­crease of EUR 99 mln amount­ing to EUR 48.51 bln from EUR 48.41 bln.

Re­struc­tured fa­cil­i­ties de­clined

to EUR 12.02 bil­lion in Fe­bru­ary mark­ing an in­crease of EUR 61 mln com­pared with the previous month. Re­struc­tured fa­cil­i­ties that con­tinue to be clas­si­fied as non-per­form­ing crept up by EUR 11 mil­lion amount­ing to EUR 8.87 bln in Fe­bru­ary.

In Fe­bru­ary, House­hold NPEs ac­counted for 52% of to­tal NPEs reach­ing EUR 11.36 bln while cor­po­rate non-per­form­ing loans ac­counted for 46% of to­tal NPEs amount­ing to EUR 10.15 bln, the CBC said.

An IMF coun­try re­port on Cyprus is­sued last week sig­nalled a warn­ing about the is­land’s stub­born debt moun­tain say­ing: “Pub­lic and pri­vate sec­tor debt re­mained ex­tremely high with a large vol­ume of non­per­form­ing loans (NPLs), leav­ing the econ­omy vul­ner­a­ble to po­ten­tial ad­verse shocks.”

It said a tougher bank­ing sec­tor strat­egy to re­duce loans is needed but “could in­ad­ver­tently in­ten­sify fi­nan­cial sta­bil­ity risks if in­vestor and cred­i­tor con­fi­dence is eroded, re­sult­ing in ad­di­tional fis­cal costs”.

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