Her findings are worrying Bank of Greece for the development of the problematic loansas in the first half of the year not only the “red loans“, but also the loans that are “one step before turning red”.

In more detail, loans overdue from 1 to 90 days (early arrears) increased by 43%, reaching €7.7 billion in June 2024 from €5.4 billion in December 2023, while the ratio of these loans to total serviced loans increased to 5.5% in June 2024, compared to 3.8% in December 2023 and this increase comes mainly from business loans in arrears from 1 to 30 days.

As mentioned in Financial Stability Reportduring the first half of 2024, loans (flows from performing loans to non-performing loans) “red” 1.3 billion euros (of which 1.0 billion euros concern loans guaranteed by the Greek State), while flows from non-performing loans to performing loans were €0.7 billion, leaving net flows to non-performing loans of €576 million.

It is noted that in both the first quarters of 2024 a net flow to Non-Performing Loans (NPL) was observed with a reduced trend in the second quarter (360 million euros in the first quarter and 216 million euros in the second quarter of 2024).

Loans in arrears of more than 90 days (not including denounced claims) increased in June 2024 and amounted to 3.7 billion euros (35.6% of NPLs), increased by 46.3% compared to in December 2023 (€2.5 billion), due to the aforementioned inclusion of loans guaranteed by the Greek State which are in the process of being repaid by the Greek State. However, it is pointed out that 68.2% of the NPLs that fall into this category are in arrears of more than one year, a percentage corresponding to that at the end of 2023 (68.5%). The corresponding delinquency rate for business loans amounts to 61.8%, for housing loans to 78.8% and for consumer loans to 58.6%.

Finally, the quality of the portfolio of Greek banks is reflected in the distribution of the total loan stock per stage according to the level of credit risk, according to International Financial Reporting Standard 9 (IFRS 9), where in June 2024 compared to December 2023 there is a marginal increase in loans with the highest credit risk (stage 3) due to the increase in NPLs, but also an increase in loans with the lowest credit risk (stage 1) due to credit expansion.

However, the total stock of non-performing loans (NPLs) stood at €10.4 billion in June 2024, up by 4.8% or €476 million compared to December 2023 on an individual basis, within balance sheet. This increase is mainly due to the integration of specific categories of loans guaranteed by the Greek State into the perimeter of NPLs, following a supervisory requirement. The ratio of NPLs to total loans in June 2024 increased marginally to 6.9% from 6.7% in December 2023, as credit expansion mitigated the negative impact from NPL growth.

In conclusion, the ratio of NPLs to total loans in June 2024 increased marginally to 6.9% from 6.7% in December 2023, remaining high and multiple times the European average (June 2024: 2.3%). The Bank of Greece considers that the efforts to de-escalate the existing stock need to continue.In addition, in the less important banks, the ratio of NPLs to total loans remains particularly high and stands at 36.4% in June 2024.