The recovery of the Greek banking system in numbers

The recovery of the Greek banking system in numbers

The gradual recovery of the credit system continued throughout 2017, is what the Bank of Greece has found after examining the Overview of the Greek Financial System (January 2018), showing good-looking medium-term prospects for financial stability. Indeed, in its report, BoE points out that this year, a GDP growth of 2.4% is expected.

Continuous shrinking of “red” openings

As far as bank risks are concerned, credit risk has appeared stabilised. The non-performing exposure fund shrinks for six consecutive quarters and was set at 100.4 billion euros, in September 2017, down by 7.6% (or EUR 8.2 billion) from the peak value recorded in March 2016. The improvement between January-September 2017 was mainly the result of loan write-offs, while positively contributing to the reduction and sale of loans by banks. The share of MEAs in the total exposures also declined marginally (September 2017: 44.6%, December 2016: 44.8%), while, on the basis of the progress reports published by the Bank of Greece, the progress in terms of achieving the operational objectives is seen as satisfactory.

X-raying businesses

At the same time, data presented by the Bank of Greece’s  on the structure of red loans are of interest. It appears that, micro-enterprises have non-performing loans at 66.5% while medium-sized 38.9%. Out of all industry sectors, where red loans account for 77.9% of their total borrowing, restaurant businesses top the list.

Concerning the structure of financing in the sectors of the Greek economy, it is noted that 19.7% of the total financing to enterprises was given to companies operating in the trade sector, with the ratio of non-performing exposures for this sector to 57.6 %, higher than the average of the average exposures index, which is 43.5%.

The Branches

Very high rates of non-performing exposures are observed in the following sectors:

– restaurants (77,9%)

– of agricultural activities (56,4%)

– telecommunications, IT and information (69%)

– processing (46,5%) and

– of construction (52,2%)

On the other hand, the lower rates of non-performing loans are indicative in the following sectors:

– energy (4.9%)

– public administration (0,7%) and

– financial corporations (20.1%).

Loan sales

In a specific analysis covering the alternative scenarios for the composition of the loan portfolios to be sold and their effect on banks’ capital adequacy, the central bank states that, even at the very low price level of 3% of the nominal value of the exposures, they could allocate 64.7% of all overdue business and consumer receivables over 360 days, that is, a total amount of 29.8 billion euros, excluding the Common Equity Share Index let 1 (CET1) fall below 12.5%.

The Commission also sees betterment

The European Commission’s first report on the treatment of non-performing loans is recording a 0.6% reduction in red loans in Greece between 2016 and 2017, but stresses that it is expected to accelerate in the near future. In particular, The Commission notes that, in Greece, the percentage of non-performing loans in relation to total loans decreased from 47.2% in June 2016 to 46.9% in June 2017, while private loans were slightly lower than 50, 5% in June 2016 to 50.6% in June 2017.

Piraeus Bank: “Red” loan sale of 200 millions to Romania

Piraeus Bank announced it has sold a portfolio worth a total of 200 million euros, in co-operation with the Bank of Piraeus Romania. These loans came from the Romanian market and were sold to the Kruk Group. “The sale combined with previous sales of similar portfolios of 400 million is part of the Bank’s systematic effort to meet its obligations under the Restructuring Plan,” the bank said…/IBNA