Greek banks’ exposure to doubtful and nonperforming loans edged down in the fourth quarter but still made up half the sector’s overall loan book, the central bank said on Wednesday.
Banks, which entered the country’s economic crisis in 2008 with nonperforming exposures (NPEs) of 14.5 billion euros or 5.5 percent of loans, saw them soar to 106.9 billion or 50.5 percent at the end of last June.
They trimmed that to 104.8 billion euros or 50.0 percent, excluding off-balance sheet items, in the final three months of last year, beating targets, the central bank said.
The mountain of NPEs, comprising nonperforming loans (NPLs) plus restructured loans likely to turn bad, is the biggest challenge facing the Greek banking system.
Its reduction would free up capital to fund productive sectors of the economy.
The nonperforming loan rate fell to 36.2 percent, beating a targeted 36.4 percent.
“The NPE ratio remains high across most asset classes,” said the central bank, which monitors the implementation of lenders’ NPE action plans in cooperation with the European Central Bank.