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Non-performing loans at 47 per cent

Non-performing loans in the Cypriot banking system stood at 47% of total loans at the end of December 2016; a fall of €3.7 billion in two years to €23.7 billion according to data released by the Central Bank of Cyprus.

Cyprus non-performing loansNON-PERFORMING loans (NPLs) in the Cypriot banking system fell in December by almost €3.7bn in two years to €23.7bn, the lowest since December 2014, the Central Bank of Cyprus said.

Total non-performing loans in the banking system still comprise 47 per cent of total loans, the said in a statement on its website on Tuesday.

The overall drop in December last year was mainly on a €2.6bn decline to €11.1bn in non-performing loans extended to non-financial corporations since December 2014, the Central Bank said. The overall drop in corporate non-performing loans more than offset a €943.8m increase in non-performing loans of small and medium size corporations. Household bad loans in two years dropped merely €557.7m overall, to €12bn.

The amount of restructured loans rose in these two years by €530.2m to €13.4bn in December, out of which €9.7bn or 72 per cent continues to be regularly serviced by borrowers and has a prospect of being reclassified as performing after a minimum 12-month probation period, the Central Bank said.

Compared with November’s figures, the total amount of non-performing loans fell in December by €204.1m, as a €195.6m decrease in corporate bad loans combined with a €146.1m drop in household non-performing loans more than offset a €138.9m increase in unserviced loans extended to other financial corporations, the bank supervisor said.

Four years after the financial crisis, the inflation rate in the euro area has started to pick up. This makes an increase in interest rates by the European Central Bank and a cut back on its asset purchase programme more likely, which in turn could negatively affect the ability of borrowers to service their loans.

Financial Ombudsman Pavlos Ioannou said on March 11 that the more time passes, banks will ultimately have to ask guarantors of terminated loans to pay for them, thus decreasing their ability to service their own loans.

The accumulated provisions in the banking system rose in December by €770.2m in two years and by €549.2m in a month.

Further reading

Non-performing loans December 2016 (Cyprus Central Bank)

Readers' comments

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  • George says:

    I have a non-performing loan that hasn’t performed for more than 3 years but the bank refuse to listen to, and accept my circumstances and any solutions I have offered, proffering to bury their heads in the sand and expect the situation will resolve itself. Sound familiar???

  • Johnny Cyprus says:

    It’s all very confusing: “non performing loans”, “bad loans”, “restructured loans”, “unserviced loans”, “terminated loans”, “non financial corporations”, “reclassified loans”, “accumulated provisions”, “guarantors” “the Cypriot banking system”.

    What does it all mean? In England back in the 1970s, we made our mortgage payments monthly, and never heard such terms.

    Ed: I’m afraid it would take me all day to answer your questions. If you Google each of the terms you’ll find their meaning. But to get you started a non-performing loan is loan that hasn’t been serviced by the debtor for 90 days.

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