Bad loans top 50 bln euros, but increase rate slows down

Bank estimates put the total figure for nonperforming loans at over 50 billion euros at the end of September, reflecting the extremely difficult economic conditions that businesses and households are faced with.

Senior bank officials said the rate of bad loans had risen to approximately 22.5 percent at end-September from 21.4 percent at the end of June and 16 percent in December 2011. They believe the value of nonperforming loans’ value had hit some 52 billion euros at the start of the fall, with an increase noted in all credit categories.

However, a senior bank official told Kathimerini that while the increase in NPLs was large, the fact that the third quarter saw a relative containment in the rate of creation of new bad loans was rather positive.

Credit sector sources say that the political stability observed in the country since the formation of the coalition government in the summer and the substantial reduction of the risk of a eurozone exit have allowed the economy to breathe a sigh of relief. While in the first and second quarters of the year there was a 2.7 percent quarter-on-quarter increase in the rate of new bad loans, it only grew by 1.1 percent in the third quarter, bank data show.

The retail sector showed a relative stabilization as bad loans only grew by half a percentage point, from 35.7 percent in Q2 to 36.2 percent in Q3, as did the mortgage loan domain, with growth amounting to just 0.1 percentage point, from 19.9 percent to 20 percent. Corporate credit fared worse, with bad loans in the sector rising from 19.6 percent in Q2 to 21 percent in Q3.

Consumer loans worth 11 billion euros were in the red, amounting to one in every four. Bad housing loans added up to 15 billion euros and NPLs to the corporate sector came to 23.2 billion euros in the third quarter of the year.

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