Latest provisional figures for May 2015, released by the Central Bank, showed that NPLs stood at €26.9 billion or 45.85% of total loans.
Cypriot banks were resolved in March 2013, as part of a €10-billion bailout by the Eurogroup and the International Monetary Fund.
Bank of Cyprus (BOC), the largest Cypriot lender, was made to recapitalize by converting 47.5% of deposits over €100,000, most of them belonging to Russian oligarchs,into stock.
International lenders also wound down the faltering Cyprus Popular Bank, known as Laiki, and folded it into BOC, along with a €9.1-billion Emergency Liquidity Assistance which the European Central Bank continued pumping in even as the lender was clearly collapsing.
The resulting chaos along with capital controls imposed by the authorities to prevent a run on the banks brought the entire economy to a standstill overnight, forcing thousands of households and small businesses to stop servicing their loans.
NPLs reached a record level of 51% of the total loan portfolios before starting a downward trend in an agonizingly slow process.
Bad loans were brought down to 47.74% at the end of 2014 and to 45.85% at the end of May 2015. The Central Bank told parliament in a confidential report that between January 2014 and end-March of this year, commercial banks had restructured non-performing loans worth €4.9 billion.
The report, obtained by Xinhua, said 26,000 loans were restructured, representing 19.2% of the total of NPLs in the entire banking system.
Loans to private individuals accounted for the majority of the restructured loans, at €2.24 billion, followed by loans to businesses (€2.085 billion) and loans to retail operations (€585 million).
The latest restructuring is not being reflected in statistics as under European Central Bank directives, a loan must be serviced for three consecutive months before it is not considered a bad loan any more.
"Restructuring is expected to pick up as there are indications of the economy returning strongly on the road to recovery," economist and lawmaker Marios Mavrides told Xinhua.
The most encouraging sign of economic recovery yet was a sharp drop in unemployment in almost all sectors of the economy.
The number of people out of work dropped by over 4,500 people to just over 42,000 people in July, representing a reduction of 9.7% year-on-year.
That was the result of more people finding jobs in the all-important construction, manufacturing and the financial and insurance sectors.
Source: Famagusta Gazette
