14.07.2022
According to the Central Bank of Cyprus (CBC), the first quarter of 2022 recorded a slight increase to 11.4% in the ratio of non-performing loans to total loans compared to the last quarter of 2021, when the ratio fell to 11.1%.
According to the updated summary data for the banking sector of Cyprus (non-performing loans data) published on the CBC website on Thursday, at the end of March 2022 there was a decrease in total NPLs by EUR 77 million , or 2.6%, on compared to the end of March 2022 December 2021.
However, total loans decreased by EUR 1,457 million , or 5.4%, from EUR 27,012 million at the end of December 2021 to EUR 25,555 million at the end of March 2022, mainly due to deleveraging initiatives. funds, mainly as a result of meeting the requirements.
As a result, despite a decrease in NPLs, the ratio of NPLs to total loans slightly increased from 11.1% at the end of December 2021 to 11.4% at the end of March 2022.
The coverage ratio was 45.7% at the end of March 2022 compared to 43.1% at the end of December 2021.
The CBC notes that between December 31, 2017 and March 31, 2022, the total reduction in NPLs was €17.7 billion , or 85.8%.
According to a CBC press release, the downward trend in NPLs observed in the first quarter of 2022 can be attributed to loan repayments (including debt-for-asset swaps) and positive migration of loans that were successfully restructured and reclassified as performing (cured) after the probationary period .
Moreover, he adds, loan write-offs have also contributed to the reduction of non-performing loans, which occur either in the context of restructuring and usually relate to amounts that already form part of the loan loss provisions of the lenders, or non-contractual or “booking offsets made against amounts already provided”. , in order to provide a more representative description of loan portfolios.
The total volume of restructured loans at the end of March 2022 amounted to 3,314 million euros, of which loans in the amount of 1,403 million euros continue to be classified as overdue loans, the Central Bank said.
The CBC notes that lenders apply the European Banking Authority’s definition of problem loans. 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.
Therefore, under this definition, a portion of restructured loans remains non-performing even if the borrower adheres to the new repayment schedule.
