Banks to be very cautious in their new provisions

Commercial banks will make higher provisions for bad loans for a third consecutive quarter in the April-June 2009 period, which will bear heavily on profits in the sector in the first half of the year. The improvement in banking conditions in Q2, mostly marked by a decline in deposit interest rates and the strong rebound of the market, will not lead to any relaxation in the provision policy, as the problems in the real economy are seen to possibly worsen. A top banking official told Kathimerini that since unemployment is on the rise and the loan portfolios of banks are seeing their quality worsen, there is no margin for fewer provisions. At the end of March deferred mortgage loans came to 6.3 percent and deferred consumer loans reached 9.5 percent.