The need for a systemic solution for the faster reduction of non-performing credit exposures, reiterates the Bank of Greece in its regular overview report of the domestic financial system.
Despite the fact that the efforts to effectively manage the large stock of non-performing exposures (NPEs), which is the biggest challenge of the financial system, have led to their reduction in 2018 by EUR 12.6 billion (from EUR 81.8 billion), their rate remains at 45.4%, as the total remaining appropriations at the same time decreased by 10%.
The “X-ray” of the decrease
The decrease in NPEs in the previous year came mainly through non-organic operations (EUR 5.9 billion in write-offs and sales of up to EUR 5.8 billion), while the net inflow of new non-performing loans continued, mainly due to default from debt-settlers.
In 2018, outstanding loans of EUR 7.7 billion became non-performing, while after loan arrangements, EUR 6.8 billion worth of loans were “cured”. From revenues and liquidations, the NPEs declined by just EUR 3.7 billion.
The amount of “unlikely to pay” loans and the total performing loans, which are behind from 1 to 90 days, are important indicators for the further increase of credit risk. The “unlikely to pay” loans amounted to EUR 25.1 billion (31% of NPEs) at the end of 2018, down by 14.6% in comparison to the end of 2017 (EUR 29.3 billion). However, it is worrying that the ratio of the delayed loans, which are in a delay of 1 to 90 days, to the total of loans serviced (early arrears) is worse. In particular, the ratio stood at 13.4% at the end of 2018, one level higher than that at the end of 2017.
The total for forborne loans amounted to EUR 46.3 billion by the end of 2018, representing 25.7% of the total loans, compared with 25.2% at the end of 2017 (EUR 50.3 billion). However, 19.9% of the already regulated loans have a delay of over 90 days, compared with 19.5% at the end of 2017. 47.8% of the NPEs with a delay over 90 days have not been settled, compared with 54.7% at the end of 2017./ibna