Total loans decreased by €486 million or 1.7%, from €28.388 million at the end of June 2021 to €27.902 million at the end of September 2021. As a result, a decrease in the ratio of NPLs to total loans was recorded from 17.6% at the end of June 2021 to 15.4% at the end of September 2021. The coverage ratio stood at 4.7% at the end of September 2021 compared with 46.8% at the end of June 2021. It must be noted that during the period between 31.12.2014-30.09.2021, there has been an overall reduction in NPLs of €23 billion or 84.3%.

According to CBC, the downward trend in NPLs exhibited in the third quarter of 2021 can be attributed, by order of significance, to the sale/transfer of loan portfolios to credit acquiring companies, to positive migrations of loans that have been successfully restructured and reclassified as performing (cured) at the end of the probation period and to loan repayments (including debt-to-asset swaps). Moreover, loan write-offs have contributed significantly to the decrease in NPLs, which take place either in the context of restructurings and usually concern amounts that already form part of credit institutions’ loan loss provisions or to non-contractual or "accounting" set-offs made against amounts already provided, aimed at a more representative depiction of loan portfolios and loan repayments (including debt-to-asset swaps).

Total restructured loans at end-September 2021 amounted to €3.911 million, of which €2.085 million continue to be classified as NPLs. It should be noted that credit institutions apply the definition of NPLs adopted by the European Banking Authority. Based on this definition, when an NPL is restructured it is not immediately reclassified as a performing facility but remains under observation within the NPL category for a further period of at least 12 months, even if the borrower strictly adheres to the new agreed repayment schedule. Therefore, according to the relevant definition, a part of the restructured loans remains non-performing, even if the borrower adheres to the new repayment schedule.

Source: Knews