NPLs, provisions spike in January, Central Bank of Cyprus says (Update-1)

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(Adds more background in seventh paragraph)

By Stelios Orphanides

Non-performing loans in the Cypriot banking system rose by more than €1.5bn in January compared to the month before to €22.1bn, the highest since July last year, as a result of the introductions of new reporting standards, the Central Bank of Cyprus said.

The increase in delinquent loans in the first month of the year was mainly on a €1bn monthly increase in corporate non-performing loans to €10.2bn, a new peak since July, the central bank said in a statement on its website on Monday. Household non-performing loans rose by half as much to €11.5bn, the highest since August. Total loan facilities rose by €1.3bn in a month to €48.4bn.

The overall non-performing loans ratio in January was 45.7 per cent compared to 47.5 per cent a year before, reflecting a decrease by €1.8bn, the bank supervisor said.

In January, Cypriot banks increased their overall provisions for loan impairments in January by over €2bn compared to December to €11.7bn, an all-time high, the central bank said. The increase in provisions was broken down to a €1.2bn concerning corporate loans and €798.9m concerning household loans to €5.9bn and €5.5bn respectively.

“…(T)he increase in total facilities, non-performing facilities and accumulated impairment at 31 January 2018 is mainly due to the implementation of the new international financial reporting standard (IFRS) 9 as from 1 January 2018,” the central bank said.

The amount of loans with 90 days in arrears rose by €1.6bn in January compared to December to €17.3bn, the bank supervisor said. Total loan restructurings rose by €262.1m to €12.1bn while the amount of restructured loans regularly serviced by borrowers rose by €401.7m to €8.9bn.

The Cyprus Business Mail understands that with the introduction of the new financial reporting standards in January, one Cypriot bank recognised interest on its non-performing loans and increased its provisions by an equal amount resulting to a zero net effect.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Douglas

    I imagine the increase could be due to the hard working families who have been conscientiously making their mortgage payments deciding to stop after reading that the Government are considering letting the non payers continue to live in the property if it’s their main home,only in fantasy Island.

    • Adele is back x

      Got it in one Douglas x

    • Wanderer

      Indeed, why would anyone want to pay for themselves and for the other guy who the government allowed not to pay. The one thing politicians and bureaucrats are good for is creating perverse incentives.

    • Blown both feet off. I’m often shocked by the ineptitude it seems more lunacy is to come. Obviously reality will bite one day regardless of laws and talk.

  • Bob Ellis

    The smoke clears and more cracks appear. Maybe Cyprus will regret trying to ride out the NPL storm by misreporting, lieing amd ignore the problem rather than actually dealing with the elephant in the room in 2013. The banking sector will drag the economy down again, why not admit to the eventuality ? and actually do something to soften the blow. Pride (coupled with arrogance), truely does come before fall.
    We have neighbours who have just started marketing their house for €900,000 when it is worth about €350,000. They owe the bank €700,000 and they are skint, where is this reported ? How many more cases like this are there ?

    • Anders Yuran

      Loads. Look at the market, prices are just crazy

    • Negative equity isn’t factored into these statistics that’s the true horror. If nobody buys it, eventually its auction time then your homeless and still owe 400k.

      • Kevin Ingham

        Spot on-the NPL figures don’t cover those who are paying their loans on assets that are worth much less than they paid for them.

        The actual banking situation is way worse than the NPL figures suggest, and that figure itself is frightening enough as it is

  • Sergey Krasilnikov

    Crisis is over, folks. Time to resume giving free moneyz to friends and relatives, russian oligarchs and EU are paying for the feast anyway! In case of trouble just print and sell a couple of thousands more passports. Easy!

  • Caulkhead

    I would suggest the increase is due the the recently restructured NPLs from previous years becoming delinquent yet again. No doubt further ‘restructuring’ will help paper over the cracks for a bit longer.

  • Kevin Ingham

    These statistics are from January, well before the latest proposed legislative nonsense about NPL’s might have persuaded solvent payers not to bother repaying their debts either.

    How can a country that has an NPL ratio of almost 50% be capable of seeing that ratio go even higher as a “result of the introductions of new reporting standards” ???? Could it really be that 50% NPL was the least damaging figure they cold present to the watching world?

    Is there anyone out there who genuinely believes that such an astronomical ratio can be somehow absorbed by selling passports and a few more tourists ?

    There is enough bad debt out there to bankrupt Cyprus to an extent that would dwarf the effects of the last bail in

    • Costas

      the Cyprus economy is forever finished

  • Jim

    The so called restructuring of NPL’s only removed them from the NPL figures for a short period.
    These restructured loans are now failing & are now returning to the NPL total.
    I am still waiting for an announcement from the Bank of Cyprus, saying when the first quarter results will be released. Last year it was the first week in May.
    Perhaps the results are bad???