articles | 02 June 2016

Cyprus' NPFs decrease by €1.1 billion during March 2016

The total Non-Performing Facilities (NPFs), recorded a decrease of €1.1 billion in March 2016, the Central Bank of Cyprus announced recently.

A similar decrease was observed in the facilities with amounts past due over 90 days.

According to the CBC, total facilities decreased by €1.6 billion during the same period, reaching €53.122 million, resulting in the decrease in the ratio of NPFs to total facilities being limited to 54bps, reaching 48.36%.

Overall, a decrease of €1.6 billion or 6%, is observed in the NPFs in the period 31 December 2014 to 31 March 2016.

According to the data collected by the CBC, during March 2016, there was a migration of restructured loans from the category of non-performing to performing facilities, totalling €215 million following the successful completion of the observance period.

The said amount increased compared to previous months (Feb. 2016: €106 million, Jan. 2016: €100 million).

"This migration is in the right direction as the CBC aims, through the restructuring targets imposed on banks, for an increase in the amount of such migrations" it is noted.

According to the Central Bank, "also contributing to the reduction of NPFs, were the increased loan write-offs, mainly non contractual, made against amounts already provided, for a fairer presentation of the loan portfolios".

With reference to loans restructured, between 1 January 2014 and 31 March 2016, 78% abide by the new repayment schedule agreed as part of the restructuring.

Additionally, an increase in the cash collections on loans restructured was observed during the above period, both in terms of the absolute value of the cash collections but also in terms of the percentage of cash collections to the total facilities restructured.

It is noted that the CBC applies the definition of NPFs laid down by the European Banking Authority. Based on this definition, when an NPF is restructured it is not immediately reclassified as a performing facility, but remains as an NPF for a further observance period of at least 12 months, even if the customer pays without arrears according to the new repayment schedule.

Facilities which had been restructured by the end of March 2016 amounted to €13,894 million, of which €10,589 million are still classified as NPFs, as a result, to some extent, of the definition of NPFs as explained above.

According to CBC data, new restructurings within March 2016 were close to €1 billion, which is higher compared to January and February 2016 levels.

The netrestructured balance as observed at the end of each month, decreased by €348 million at 31 March 2016 compared to 29 February 2016 because, apart from the new increased restructurings, there were also repayments and migrations out of the restructuring category following the completion of the observance period.

Out of the 14,046 applications pending for restructuring during the reference period, 3,703 cases resulted in a restructuring agreement with the borrowers, within the month of March 2016, a volume that exceeds the agreed restructuring cases in the previous two months (Feb. 2016: 2.549 cases, Jan. 2016: 1,979 cases). 10,017 cases (71.32%) were carried forward to be examined in the next month and 326 cases (2.32%) were rejected either by the bank or the borrower.

Source: Famagusta Gazette

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