NPLs have fallen slightly compared to previous months with a drop of €122 million in February 2018, according to figures announced by the Central Bank of Cyprus. The overall amount, however, remains high.
In January 2018, NPLs increased by €122 million due to the application of the new International Financial Reporting Standard (IFRS) 9 as of 1 January 2018. By applying IFRS 9, several banks had to make additional provisions for bad debts by calculating future loan losses. Households’ NPLs dropped to €11.4 billion from €11.5 billion and business’ NPLs to €10.1 billion from €10.2 billion. Total loans increased from €48,413 million at the end of January 2018 to €48,512 million at the end of February 2018. The coverage ratio of NPLs with provisions increased from 52.7% to 53.9% at the end of February 2018. In 2017, non-performing loans showed a decrease of €3.2 billion.
Meanwhile, it is expected that after sales of mortgaged property there will be equal distribution of outstanding sums still due among all guarantors. The issue came to light after a meeting of the House Finance Committee which examined the proposals of DISY to reducing red loans through tax extensions.
According to the proposals, if there is still a balance on the loan after the sale of a mortgaged property the bank will turn to the guarantors. The balance will then be distributed equally to all guarantors. In case of death of one of the guarantors his share will be absorbed by the bank as a loss.