Non-performing loans (NPLs) fell in 2017 and credit risk is down compared with previous quarters, but a further decline will depend on developments in Greece’s macroeconomic data, the Bank of Greece has said.
The central bank asked Greek banks to review their business plans. The report released on Thursday noted that the NPLs rate fell to 43.1 percent at the end of 2017 from 44.8 percent a year earlier (€222.1 billion from €237.5 billion), while NPLs fell to €95.7 billion from €106.3 billion, reflecting increased write-offs worth €8.1 billion.
The large enterprises portfolio (-19.2 percent) and the consumer portfolio (-19.7 percent) recorded the biggest percentage reductions in NPLs. The mortgage loan portfolio recorded a 0.4 percent increase in 2017.
The Bank of Greece noted that despite the fact that banks have taken initiatives for the active management of non-performing loans, such as restructurings, higher receipts, liquidations and selling of NPLs, and have recorded significant progress in fulfilling their business goals and improved the quality of their portfolio, there was no room for complacency.
Banks need to introduce a unified approach of debtors with multiple creditors, to find strategic defaulters and implement a final solution for non-viable enterprises. It noted that even if banks achieved fully their business goals by the end of 2019, the percentage of NPLs will remain a high 35.2 percent of their portfolios.
The central bank said resolving the problem required faster efforts, adding that banks would have to review their business plans emphasizing on developing new services and further reducing their operating costs.