Mortgages compromise bad loan progress


Greek banks remained within the target range for reducing their bad loans in the second quarter of the year, according to a Bank of Greece report, but in order to do so they proceeded to extensive loan write-offs, while there is some concern regarding mortgage loans.

Banks achieved their Q2 goals for reducing nonperforming exposures (including loans in the process of restructuring) but scored poorly in nonperforming loans. Mortgage loans in particular were off target in both categories.

Bank officials attribute the NPL failure to the deterioration in the general economic climate in the April-June period, until the completion of the second bailout review.

In Q2 the number of new bad loans again surpassed that of bad loans turned good – a trend that must be reversed in the coming quarters.

The reduction of bad loans was almost exclusively effected through write-offs, which in the second quarter added up to 1.9 billion euros and in the first half of 2017 to 3.3 billion. By contrast, there was hardly any progress in the collection process, liquidations, sales of loans or in the rehabilitation of nonperforming loans.