Greek banks beat ECB target to shrink bad loans exposure

ProtoThema / Bank of Greece

 Reuters – Greek banks made further progress during the fourth quarter in reducing their exposure to  non-performing loans, central bank data showed on Tuesday.

At the end of December, exposure to  non-performing loans had fallen by one billion euros to 104.8 billion euros, or 50 percent of banks’ overall loan book, the data showed.

NPEs comprise non-performing loans (NPLs) – past credit due for more than 90 days – and restructured loans likely to turn sour. It is thought that reducing exposure to NPLs would free up more capital to fund productive sectors of the economy, which is slowly recovering.

Banks have agreed with European Central Bank regulators to exposure  by 38 percent to 66.7 billion by end-2019, meaning the NPL ratio will fall to 33.9 percent of their loan books.

The agreed targets are back-loaded, meaning most of the reduction will take place next year and in 2019, based on the plan.

Despite the reduction in the fourth quarter, NPEs encompassing mortgages, corporate and consumer loan portfolios remain high across the board, the Bank of Greece said.

The main driver behind the NPE reduction has been write-offs, while liquidations, collections and loan sales contributed to a lesser extent, the central bank said.