CYPRUS: Bad loans drop by EUR 5.6 bln after Cooperative Bank dismantled

Non-performing exposures (NPEs) in the Cyprus banking system dropped 33.7% to €11.02 bln in September 2018 marking a €5.61 bln plunge since June when Hellenic Bank acquired the good assets of state-owned Co-op Bank.

According to Central Bank of Cyprus data, total NPEs fell from €16.6 bln in June to €11.02 bln marking their lowest level since the 2013 financial crisis.

From the beginning of 2018 NPEs have been reduced by €10 bln.

The percentage of NPEs at the end of September amounted to 31.8% from 40.3% in June and 43% at the end of 2017, while accumulated provisions in the banking system amounted to 51.9% from 48.3% in June.

“The downward trend in NPFs can be attributed mainly to the removal of loan portfolio from banking sector transferred to KEDIPES,” the CBC said.

Following the sale of the Co-ops good assets to Hellenic, the CCB lost its banking license and was renamed as Cooperative Asset Management Company establishing a subsidiary called the Cyprus Asset Management Company (KEDIPES) which will wind down NPEs amounting to €5.7 bln.

Due to the removal of the Co-op’s NPEs, households NPEs in September halved to €5.32 bln corresponding to 48.3% of total NPEs, while corporate NPEs amounted to €5.35 bln or 48.5% of total NPEs.

Total restructured facilities (NPFs) in September amounted to €7.319 bln, of which €4.818 bln continue to be classified as NPFs, the CBC said.