By Chrysostomos Tsoufis

Greek banks continued in 2022 to…get rid of bad loans from their portfolios (without meaning that they disappear, it is estimated that the funds have been loaded with loans worth around €70 billion) but the Giannis Stournaras warns that the danger remains. In his report on financial stability, the central banker rings a bell by pointing out that “the deterioration of the financial situation of households with the erosion of disposable income due to high inflation, but also of some businesses, with the increase in operating and financing costs, may in the medium term lead to the creation of new NPLs (non-performing loans), which will once again affect the quality of banks’ assets”.

The figures of the annual report of the Bank of Greece show that 2022 finally left us with a single-digit percentage of non-performing loans at 8.7% from 12.8% in 2021 and amounting to €13.2 billion. To be precise, in the 4 systemic banks it is at 6.4%, but the smaller non-systemic ones raise the average as their own average is 44%. Regardless, it remains at a high level, more than three times the Community average of 1.8%.

As expected, consumer loans “redden” more easily, almost 2/10 (18%) are in arrears. 10% is the corresponding percentage in housing and 7.6% in business.

Of the red business grants, 27% have been given to freelancers and very small businesses, followed by small and medium-sized businesses with 11.7%.

The analysis of the data shows that the most red business loans are in the catering sector with 28.4% and construction with 21%. They are followed by trade with 13%, real estate managers with 12%, accommodation with 10.5%, agricultural activities with 10.3% and manufacturing with 10%.

On the contrary, the sectors that “produce” the fewest bad loans are energy with 1% and financial companies with 0.8%

From red bank loans 30.6% is considered to be of uncertain collection, approximately €4 billion and 36.2% has been reported.

1/4 of bad loans are in arrears for more than a year and this is extremely worrying since their percentage has increased by 4 points compared to last year.

An indication of risk is loans in arrears between 1 and 90 days, one step before being red flagged, which increased by 25% from €4bn to €5bn, a delinquency attributed according to the report to business loans.

The consolidation index – i.e. the loans that “turn” from non-performing to performing – remains low at 4% (with the rate for housing at 7.7% and for business at just 2.8%), while the index default is at 0.4%, marginally lower than last year.

The aim of the systemic banks for the period 2023 – 2025 is to reduce their stock of non-performing loans by an additional €3.1 billion, i.e. more than 30%, with the aim of converging even more with the average of the banks in the euro area.