CENTRAL BANK OF CYPRUS

EUROSYSTEM

9 January 2018

Aggregate Cyprus banking sector data (non-performing facilities data)

with reference date 30 September 2017

The Central Bank of Cyprus (CBC) has today posted on its website updated aggregate Cyprus banking sector data (non-performing facilities data)(Aggregate Cyprus Banking Sector Data).

A. Data and Indicators

The tablesbelow summarise the evolution of the aggregate non-performing facilities (NPFs) and related indicators for all credit institutions operating in Cyprus (domestic operations only) on a consolidated basis.

Table 1: Summary aggregate data for all credit institutions

30/9/2017 / 31/8/2017 / 30/6/2017 / 31/3/2017 / 31/12/2016 / 31/12/2015 / 31/12/2014
€million / € million / €million / €million / €million / € million / € million
Total facilities / 48.564 / 48.897 / 49.820 / 50.401 / 50.436 / 58.187 / 57.224
Total facilities with amounts past due 90 days / 16.479 / 16.803 / 17.139 / 17.374 / 17.400 / 20.994 / 22.015
Total non-performing facilities / 21.476 / 21.865 / 22.420 / 23.170 / 23.810 / 26.669 / 27.328
Total restructured facilities
of which: those that continue to be classified as non-performing facilities / 12.375 / 12.554 / 12.818 / 13.043 / 13.437 / 14.154 / 12.860
8.688 / 8.802 / 8.911 / 9.213 / 9.759 / 10.718 / 9.234
Total accumulated impairment (provisions) / 10.067 / 10.032 / 10.463 / 9.875 / 9.848 / 10.001 / 8.974

Source: CBC.

Note: Excluding the overseas operations of domestic credit institutions.

Table 2: Aggregate indicators for all credit institutions

30/9/2017 / 31/8/2017 / 30/6/2017 / 31/3/2017 / 31/12/2016 / 31/12/2015 / 31/12/2014
% / % / % / % / % / % / %
Total facilities with amounts past due 90 days / Total facilities / 33,9 / 34,4 / 34,4 / 34,5 / 34,5 / 36,1 / 38,5
Total non-performing facilities / Total facilities / 44,2 / 44,7 / 45,0 / 46,0 / 47,2 / 45,8 / 47,8
Total accumulated impairment (provisions) / Total non-performing facilities / 46,9 / 45,9 / 46,7 / 42,6 / 41,4 / 37,5 / 32,8
Total restructured facilities /
Total facilities / 25,5 / 25,7 / 25,7 / 25,9 / 26,6 / 24,3 / 22,5

Source: CBC.

Note: Excluding the overseas operations of domestic credit institutions.

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CENTRAL BANK OF CYPRUS

EUROSYSTEM

Table 3: Aggregate dataand indicators for all credit institutions by institutional sector

(end of September 2017)

Total facilities / Total
non-performing facilities / Total facilities with amounts past due 90 days / Total
restructured facilities / of which:
those that continue to be classified asnon-performing facilities / Total accumulated impairment (provisions) / Total
non-performing facilities / Total facilities / Total accumulated impairment (provisions) / Total non-performing facilities
€million / €million / €million / €million / €million / €million / % / %
Total / 48.564 / 21.476 / 16.479 / 12.375 / 8.688 / 10.067 / 44,2 / 46,9
General government / 789 / 37 / 8 / 36 / 25 / 12 / 4,6 / 33,9
Other financial corporations / 8.142 / 483 / 273 / 380 / 284 / 218 / 5,9 / 45,2
Non-financial corporations
of which: SMEs / 18.905 / 9.644 / 7.095 / 6.131 / 4.258 / 4.988 / 51,0 / 51,7
14.954 / 8.408 / 6.473 / 5.030 / 3.647 / 4.361 / 56,2 / 51,9
Households / 20.728 / 11.313 / 9.102 / 5.828 / 4.121 / 4.849 / 54,6 / 42,9

Source: CBC.

Note: Excluding the overseas operations of domestic credit institutions.

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CENTRAL BANK OF CYPRUS

EUROSYSTEM

B. Comments

During the third quarter of 2017 there was a further decrease of €944 million or 4,2% in aggregate NPFs compared with the end of June 2017, with the largest part of the fall totalling€498 million exhibited in August2017. Total facilities declinedby €1.256 million from€49.820 million at end-June 2017 to €48.564 million at the end of September 2017. This has resulted in a drop in the ratio of NPFs to total facilities from 45% at end-June 2017to 44,2% atthe end of September 2017. It must be noted that during the period between end-December 2014 and the end of September 2017, there has been an overall decrease in NPFs of €5,9 billion or 21,4%. The coverage ratio rose to 46,9% at end-September 2017 compared with 46,7% at the end of June 2017.

The downward trend in NPFs can be attributed to increased restructurings successfully completed by the end of the observance period and reclassified as performing facilities, repayments, settlement of debt through swaps with immovable property that is expected to be sold with the aim of a faster cash collection as well as write-offs.The analysis of additional data[1] collected by the CBC with respect to fixed-term loans[2]shows that there has been an improvement in the factors contributing to the reduction of NPFs e.g. collections on restructured facilities and amounts transferred to performing facilities due to successful completion of restructurings by the end of the observance period.

As mentioned above, the reduction in NPFs is also due to the rise in loan write-offs, which take place in the context of restructurings and usually concern amounts that already form part of credit institutions’ loan loss provisions. However, non-contractual or "accounting" set-offs are also made against amounts already provided aimed at a more representative depiction of loan portfolios.

As regards repayments of NPFs through settlements that involve or include acquisition of real estate/shares against debt by the credit institutions, these are mainly implemented in the case of large corporate entities.

It should be noted that credit institutions apply the definition of NPFs adopted by the European Banking Authority. Based on this definition, when an NPF is restructured it is not immediately reclassified as a performing facility but remains under observation within the NPF category for a further period of at least 12 months, even if the customer follows without arrears the new agreed repayment schedule. Total restructured facilities at end-June 2017 amounted to €12.375 million, of which €8.688 million continue to be classified as NPFs, partly due to the definition of NPFs as explained above.

Credit institutions continue their intensive efforts towards restructuring NPFs in cases where viable settlements are possible. At the same time, the success of some restructurings depends on the prospect of disposing the collateral within the specified time frame. Anet reduction in restructured facilities of €443 million has been exhibited at the end of September 2017 compared with end-June 2017, which was due to increased repayments, write-offs, settlement of debt through swaps with immovable property and reclassifications out of the restructuring category following the successful completion of restructurings by the end of the observance period.

At the end of the third quarter of 2017, out of the 20.856 accumulated applications for restructuring, agreements with the borrowers had been concluded in 3.195 cases (14,6%), 17.814 cases (81,5%) had been carried forward to be examined in the next quarter while 847 cases (3,9%) had been rejected either by the bank or the borrower.

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[1]The targeted additional data are collected from credit institutions operating in the domestic economy (i.e. branches of third country credit institutions operating in Cyprus are excluded).

[2]Total facilities include, in addition to fixed-term loans, balances on accounts with revolving credit limits (e.g. overdraft accounts).