The Cyprus Central Bank (CCB) reports that non-performing loans (NPLs) accounted for 17.4% of total bank loans at the end of July; down from 17.6% at the end of June 2021.
According to the CCB, NPLs amounted to €4.979 billion in July 2021, a fall of approximately €8 million compared to €4.987 billion in June 2021 as follows:
- Non-financial corporations – €2.073 billion of which €1.712 billion are loans of small and medium-sized enterprises (SMEs).
- Households – €2.670 billion.
- Other financial corporations – €236 million
However, total loans rose to €28.528 billion at the end of July, up €137 million from June 2021’s figure of €28.391 billion.
The coverage ratio amounted to 47.8% at the end of July 2021, compared to 46.8% at the end of June 2021.
The value of total loans restructured by the end of July 2021 amounted to €4.133 billion or 14.5% of the total loans compared with €4.008 billion at the end of June 2021. Of that €4.133 billion, €2.383 billion are still classified as non-performing loans, according to the EBA classification.
which €2,383 million are still classified as non-performing loans, according to the EBA classification.
In August, Cyprus started the process of transforming the Cyprus Asset Management Company (KEDIPES) into a national asset management company, also known as a bad bank. As a national asset management company, the bad bank will help the banking system rid itself of non-performing loans (NPLs).
(NPLs are a thorn in the side the Cyprus banking sector. Although it’s anticipated that they will reduce, NPLs pose a risk to the stability of the island’s financial system and they continue to be the primary obstacle to strengthening the Cypriot banking sector.)