Non-performing loans (NPLs) in the Cyprus banking system dropped to €5.11 billion at the end of 2020, marking a decline of €3.86 billion compared with the respective period of 2019, data released by the Central Bank of Cyprus (CBC) show.
The annual drop amounting to 43% is mainly attributed to an NPL portfolio sale by Bank of Cyprus (project Helix 2A €0.91 bl), the €0.5 bl write-down by Hellenic Bank and the sale of an NPL package amounting to €0.32 bl by National Bank of Greece Cyprus bank. In 2020 new NPL formation was minimal due to a debt repayment moratorium enforced by the Cypriot authorities from March until December 2020, which covered performing loans totalling €11.7 bl, as part of the measures to minimise the pandemic.
According to the CBC, the ratio of NPLs to total loans at the end of 2020 amounted to 17.7% compared with 27.9% in end-2019. The NPL coverage ratio stood at 46% in end-2020 compared with 53% in end-2019.
Loans in arrears for 90 days dropped to €3.93 billion in the end of 2020 from €7.4 billion and amounted to 13.6% of total loans.
According to the CBC, NPLs in the Cyprus banking system mark a reduction of over €22 billion since the end of 2014, with the largest annual drop in 2019 due to sale of the former state-owned Cooperative Cyprus Bank (CCB) to Hellenic Bank and the conversion of the CCB to an asset management company.
Compared with November 2020, the NPLs marked a reduction of €484 million.
According to the data, of the total €5.11 bl NPLs in end-2020, 54% of €2.75 bl were held by households and 42% or €2.13 bl were corporate NPLs, of which €1.8 bl held by small and medium sized enterprises (SMEs).
Provisions against household NPLs in end-2020 amounted to 42% while provisions for corporate NPLs amounted to 53%. Provisions for NPLs held by SMEs amounted to 57%, the CBC said.