Greece’s four systemic banks intend to downwardly revise their nonperforming exposure (NPE) targets for 2019 and the years to follow, heeding the call by the Bank of Greece (BoG) for increasing their efforts to clear out their bad-loan stock.
In its report on monetary policy published on Monday, the Greek central bank noted that Alpha, Eurobank, National and Piraeus are on course to meet the target for cutting their NPEs to 43 percent of all loans by the end of this year and down to 35.2 percent by end-2019.
Next month banks are expected to show that they have met their targets for the first half of the year, but this has mainly been due to write-offs, as the portfolio sales have only recently started gathering pace, while loan restructurings and the liquidation of collateral through auctions have not yet reached the desired level.
Therefore, in the plans that banks are drafting and will submit to the European Central Bank’s Single Supervisory Mechanism in September, they intend to adjust lower their NPE reduction target for end-2019 and take the goal for the end of the three-year period of 2019-21 below 20 percent of all credit, sources have told Xinhua.
“This is a very optimistic target, and there are many conditions in the general economy that have to be met for such a level to be achieved,” Dimitris Kenourgios, lecturer in finance at the University of Athens, commented when speaking to Xinhua.
“Banks are doing the right thing setting the bar high, but there are many asterisks in the general economy that will also affect the course of the NPE reduction process,” he added.