According to data released on Friday by the Central Bank of Cyprus (CBC), at the end of September 2021, there was a decrease in total NPLs of 722 million euros or 14.4% compared to the end of June 2021.
Total loans decreased by 486 million euros, or 1.7%, from 28,388 million euros at the end of June 2021 to 27,902 million euros at the end of September 2021, at the end of June 2021 to 15.4% at the end of September 2021 The coverage ratio was 4.7% at the end of September 2021 compared to 46.8% at the end of June 2021. the reduction in non-performing loans amounted to 23 billion euros or 84.3%.
According to the Central Bank, the downward trend in NPLs observed in the third quarter of 2021 can be explained in terms of significance by the sale / transfer of loan portfolios to credit acquiring companies, positive migration of loans successfully restructured and reclassified as completed at the end of the probationary period and until the loan is repaid (including debt-for-asset swaps). Moreover, loan write-offs have contributed significantly to the reduction of NPLs that occur either in the context of restructuring and usually relate to amounts that already form part of the loan loss allowances of credit institutions, or non-contractual or “accounting” settlements; deductions from amounts already disbursed, aimed at a more representative display of loan portfolios and loan repayments (including debt-for-asset swaps).
The total amount of restructured loans at the end of September 2021 was EUR 3.911 million, of which EUR 2.085 million is still classified as NPLs. It should be noted that credit institutions apply the definition of problem loans adopted by the European Banking Authority. Based on this definition, in a NPL restructuring, it is not immediately reclassified as a non-performing credit line, but remains under NPL supervision for an additional period of at least 12 months, even if the borrower is strictly adhering to the new agreed repayment schedule. Thus, under the relevant definition, a portion of renegotiated loans remains non-performing even if the borrower adheres to the new repayment schedule.