Bad loans rise to 33 pct of all credit issued

By Evgenia Tzortzi

Nonperforming loans to enterprises and households in Greece peaked in the first quarter of the year, exceeding 71 billion euros. This amounted to a third of the banks’ loan portfolios, which at the end of March added up to 215.9 billion euros, according to bank data.

There was therefore a rise from 31.8 percent at end-December to 33 percent in the bad loan rate within three months, although credit sector experts are now speaking about a slowdown in the creation of new NPLs and expect the growth rate to come to zero at the end of the second quarter. The third quarter should see the bad loan rate start to drop, according to the same estimates.

The latest data show that the biggest problem remains in consumer credit, which was the first to be hit by the financial crisis. However there is also a growing problem in corporate loans, which constitute the largest category of loans to the private sector as they account for some 60 percent of lenders’ portfolios. Bank data take the sum of corporate loans delayed for at least 90 days to 38 billion euros, while small and medium-sized enterprises have a 47 percent rate of bad loans, which will soon hit 50 percent.