Non performing facilities shrink by 9.6% in Cyprus in first half of 2016

Non performing facilities in Cyprus shrank by 9.6% in the first six months of this year according to data the Central Bank of Cyprus released on Thursday.

In a press release the Central Bank notes that according to an analysis of additional data with respect to fixed term loans there is an improvement in factors reducing NPFs but points out that “there is still a long road towards the resolution of the NPFs problem.”

“During the second quarter of 2016, there was a decrease of Euros 1 billion in the total NPFs, for its most part, within June 2016,” the press release says.

Total facilities, it adds, “decreased by Euros 3.2 billion during the same period, reaching Euros 49,950 million, resulting in the increase in the ratio of NPFs to total facilities, from 48.37% to 49.45% despite the significant decrease of NPFs in absolute numbers.”

“It is noted that, in the period 31 December 2014 to 30 June 2016 there was an overall decrease in NPFs in the order of Euros 2.6 billion or 9.6%,” is notes.

The drop in NPFs, it continues, “is the result of increased repayments, restructurings successfully completing the observance period and migrated to performing facilities, write-offs and loans settlement through exchange with immovable property ultimately aiming for quicker collection through their sale.”

“The analysis of additional data collected by the CBC with respect to fixed term loans, demonstrates that there is an improvement in the factors reducing NPFs, e.g. collections on restructured facilities and amounts transferred to the performing facilities due to successful completion of the observance period,” the Central Bank says.

However, it stresses, “there is still a long road towards the resolution of the NPFs problem.”

Facilities with forbearance status by the end of June 2016 amounted to Euros 13,700 million, of which Euros 10,324 million are still classified as NPFs, it notes.

“Banks continue their intensive efforts towards restructuring NPFs, for the cases where viable restructurings are possible,” it says.

At the same time, it continues, “the success of some restructurings depends on the prospect of disposing the collateral within the specified time frame.”

“A net reduction of Euros 194 million is observed as at 30 June 2016, compared to 31 March 2016, because, apart from the new and increased restructurings, there were also repayments and migrations out of the restructuring category following the successful completion of the observance period,” it points out.

Out of the 20,405 applications pending for restructuring during the second quarter 2016, 7,785 cases resulted in a restructuring agreement with the borrowers, 11,449 cases (56.11%) were carried forward to be examined in the next quarter and 1,171 cases (5.74%) were rejected either by the bank or the borrower, the Central Bank says.

Source: Cyprus News Agency.