19 September 2018

BoG: Greek banks' NPEs reduce by 2,1%

07 June 18 - RE+D Magazine
BoG: Greek banks' NPEs reduce by 2,1%


Pepper Hellas

Consultant - GREECE


Greek banks achieved their goals in reducing non-performing loans in the first quarter of 2018, the Bank of Greece said in a report released.


The central bank, in a report on the Operational Targets for Non-Performing Exposures (NPEs), said that at end-March 2018, the stock of Non-Performing Exposures (NPEs) decreased by 2.1 pct compared to end-December 2017 and reached 92.4 billion euros or 48.5 pct of total exposures. Compared to March 2016, when the stock of NPEs reached its peak, the reduction was 14 pct or 14.8 billion euros.

The reduction of NPEs over the past quarter is driven by write-offs which amounted to 1.7 billion euros. The quarterly cure rate remained at the same level as in the fourth quarter of 2017 at 1.8 pct, a little lower than the default rate that increased in the last quarter reaching 1.9 pct, thus reversing the good performance noticed in the fourth quarter of 2017.

The performance in collections, liquidations and sales is slightly worse compared to the previous quarter. An improved picture is expected in the near future, as banks have already announced and in some cases executed sales of loans. Better performance is noted in the consumer and Small Business and Professionals (SBP) loan portfolios, where the quarterly reduction was 5.1 pct and 6.6 pct respectively.

The performance in the mortgage book was once again subdued, as banks recorded a quarterly reduction of only 0.3 pct. The overall reduction of NPEs achieved on an annual basis (compared to March 2017) in the business portfolio reached 12.6 pct and a sizeable 23.4 pct in the consumer portfolio, whereas, in the mortgage book a small decrease of only 0.8 pct was noted.

The percentage of NPE obligors that have applied for legal protection remains significant but shows signs of deceleration.

On aggregate, 13.7 pct of NPE obligors have applied for legal protection, compared to 13.9 pct and 14.4 pct in December and March 2017 respectively. The highest level of protection is observed in the mortgage portfolio, where the percentage exceeds 30%. The NPE ratio still remains high across most asset classes.

For end-March 2018, the NPE ratio was 43.9 pct for residential, 57.2 pct for consumer and 49.6 pct for the business portfolio.

On Operational Targets for Non-Performing Exposures (NPEs), which refers to end of March 2018 data, the report provides, on a quarterly basis, an aggregate summary of the developments of the operational targets and selected Key Performance Indicators (KPIs) that have been set by the Greek banks in relation to NPEs compared to the targets set in September 2017. Including off-balance sheet items the stock of NPEs was reduced by 2.3 pct in the first quarter of 2018 at 93.5 billion euros or 43.1 pct of total exposures.

Provisions at system level were significantly increased at 49.0 pct in March 2018 from 46.2 pct in December 2017, while including the value of collaterals (reported up to the gross value of the loan) NPEs coverage exceeded 100 pct.


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