CYPRUS: Co-ops loan restructuring at €1.25 bln, NPLs drop to 47%

The Co-operative Central Bank, the amalgamation of 18 Co-op savings that were bailed out and taken over by the government in 2014, has restructured loans to the tune of EUR 1.25 bln, up 20% from 2015, and reduced the ratio of non-performing loans to 47%.

 
The CCB’s CEO, Nicolas Hadjiyiannis, said in a memo to staff, that NPLs (loans 90 days past due) declined by EUR 800 mln in 2016 marking a reduction of 12.2% year on year, whereas non performing exposures (delinquent bad loans according to the EBA’s more strict definition) declined in 2016 by EUR 370 mln or 4.9% year on year.
The increased momentum in loan restructuring pushed the NPL ratio down to 47% of the CCB’s loan book, its lowest level since the banking crisis in 2013 and the EUR 1.67 bln state injection in 2014.
.The CCB liquidity exceeded EUR 4 bln in 2016, while net deposit inflow in December 2015 was over EUR 60 mln, Hadjiyiannis said according to the circular.
New loans doubled in 2016 compared with 2015 reaching EUR 250 mln, with Hadjiyiannis pointing out that “much more effort is needed in 2017.”
However he added that the Co-op sector in 2016 posted a CET1 capital ratio of over 16% “making us the best capitalised bank compared to our main competitors.”
The CCB has set up an asset management unit which will enable the Co-ops to manage any real estate as part of a debt to asset swap, with the portfolio now estimated at EUR 500 mln.
With a healthier balance sheet, Hadjiyiannis said 2017 will constitute another landmark year in the Co-ops’ history, as the CCB will seek to list on the Cyprus Stock Exchange, allowing the state to eventually reduce its stake from 99% to 25%.