CYPRUS: Borrowing up 11% in H1 while NPLs continue to drop

New loans issued in H1 2019 were up 11.5% compared to the same period last year, while the thorny issue of non-performing loans is dissipating as toxic mortgages dropped about 30% of all loans, significantly down from the 50%-plus during the financial crisis in 2012.

According to Central Bank of Cyprus data, new loans issued in the first six months amounted to €1.76 bln, the highest level in the last four years and 56% of all new loans in 2018.

New corporate loans over €1 mln totalled €890 mln, up 27% year on year and the largest share of total new lending. Housing loans were marginally up at €454 mln, from €444 mln in H1 2018.

‘Small’ corporate loans of less than €1 mln declined to €232 mln from €257 mln in the same period last year.

New loans issued in Q2 2019 totalled €908 mln, up 7.5% year on year and 7% quarter on quarter.

The central bank said that NPLs as defined by the European Banking Authority declined to €10.14 bln in March, down by €151 mln from February, representing 30.6% of all loans which in March amounted to €33.11 bln.

NPLs defined by international reporting standards recorded a smaller drop to €7.9 bln in March from €7.97 bln in February, representing 24% of all loans.

On a quarterly basis, NPLs dropped by €116 mln at the end of March from Q4 2018 and by €8.23 bln quarter on quarter.

This includes the sale of the Bank of Cyprus NPL portfolio valued at €2.7 bln and the transfer of NPLs of the former Cyprus Cooperative Bank (CCB) to the state-owned asset management agency, KEDIPES, after the sale of the CCB’s performing assets to Hellenic Bank.

Household NPLs in March amounted to €5.15 bln or 51% of total NPLs, down €38 mln from February, whereas corporate NPLs amounted to €4.7 bln down by €118 mln from February.