DBRS Morningstar rating agency, in a report points out that Cypriot banks substantially accelerated the reduction of their legacy NPEs in 2020. The NPE ratio dropped by 10 percentage points throughout 2020.
Furthermore, the agency noted that NPEs not provisioned for, reached their minimum in several years. DBRS Morningstar expects the sales of bad loans to non-bank institutions to remain the main driver of NPE reduction.
“The battery of support measures have effectively reduced and deferred the potential impact on banks` asset quality during 2020. However, as the extraordinary support is withdrawn, credit losses could start to accumulate in the system”, says DBRS Morningstar.
It is also noted that non-performing assets and overall leverage remains high. DBRS Morningstar views positively some of the measures to continue addressing the challenge
Source: Cyprus News Agency