Ank of Cyprus set to go away legacy of 2013 monetary disaster behind, CEO says (VIDEO)
The Financial institution of Cyprus, the island’s largest lender, goals to realize a single-digit non-performing mortgage price by 2022, forsaking the issues inherited from the 2013 monetary disaster that devastated the banking sector of the island, the financial institution’s CEO, Panicos Nicolaou, instructed Cyprus Information Company.
In an interview with CNA, Nicolaou, CEO of the biggest Cypriot lender, mentioned that regardless of the uncertainty of the coronavirus pandemic, the financial institution closed 2020 gross sales of NPL within the area of 1.5 billion d ‘euros, which left the financial institution “ significantly better off’ ‘. to satisfy the challenges of the persevering with pandemic, declaring that any future inflow of unhealthy debt will probably be offset by the continued discount within the financial institution’s inherited NPLs.
However Nicolaou famous that 2021 won’t be simple and added that Cyprus’s economic system is predicted to get better within the second half of the yr, relying on how the pandemic is managed.
Because the 2013 monetary disaster in Cyprus, the Financial institution of Cyprus concluded in 2020 a complete discount of NPL amounting to 13 billion euros, or 88% of its complete NPL, and now goals to realize a single-digit NPLs to complete loans regardless of the lingering fallout from the pandemic.
“Admittedly, 2020 has not been a pure yr, however we now have achieved loads nonetheless. We’ve got offered 1.4 billion euros in new loans to assist the economic system, we now have put in place a moratorium on mortgage repayments on greater than 25,000 accounts for a complete quantity of 6 billion euros, however in on the similar time, we now have diminished the chance in our steadiness sheet, ”mentioned Nicolaou, declaring that the financial institution within the midst of the Covid pandemic diminished its inventory of NPL from 3.9 billion euros to 1.8 billion euros bearing in mind the 2 gross sales of NPL concluded final yr.
“Which means our NPL price has gone from 30% to 16% as we now have maintained excessive liquidity and strengthened our capital,” he added.
On considerations concerning the potential inflow of NPL because of the expiration of the nine-month fee vacation imposed on Cyprus as a part of measures to mitigate the impression of the Covid pandemic on the economic system, Nicolaou mentioned the Cypriot fee vacation, though probably the most beneficiant within the EU, didn’t have strict standards and was due to this fact utilized by debtors who didn’t have liquidity issues.
“That is demonstrated by the present scenario. As we introduced in our outcomes, till mid-February 95% of debtors have paid their due dates and this is essential and really encouraging, ”he added, recalling that in the summertime of 2020 the financial institution reviewed 90% of loans below moratorium. and offered debtors going through restructuring difficulties or liquidity help.
Concerning projections for future NPL inflows because of the pandemic, Nicolaou mentioned the financial institution has knowledgeable the market that it’ll proceed to cut back its NPL portfolio by natural discount or additional NPL gross sales.
“Due to this fact, any new movement of NPL will probably be offset by the discount within the financial institution’s inventory of NPL,” he added.
“Progress is on par with the economic system, however we’re cautiously optimistic that the issues arising from the pandemic on banks’ steadiness sheets will probably be manageable,” he continued.
Requested about the opportunity of new provisions on mortgage write-downs because of the pandemic, the top of the Financial institution of Cyprus mentioned the financial institution had taken provisions within the quantity of 200 million euros in 2020, of which 55 million euros. euros linked to the pandemic which represent “our buffer for the disaster. “However he added that if new provisions are wanted, the financial institution has a 60% protection price and has the capital to soak up new provisions.
He famous, nevertheless, that after two gross sales of NPL’s wallets in 2020, the financial institution is “significantly better positioned” to take care of the persevering with pandemic.
“Given our scenario firstly of 2020 the place we ended up with an NPL of 16% and an NPL price of seven% web of provisions from 16% firstly of the yr, we now have considerably diminished the chance of our steadiness sheet and this vital discount permits us to handle extra successfully any adverse growth that might end result from the pandemic, ”added Nicolaou.
In response to the query of whether or not 2021 will mark the conclusion of the issues inherited from the monetary disaster of 2013, Nicolaou recalled the financial institution’s market communication even earlier than the NPL gross sales of Helix 2 that the target is to cut back its single-digit NPL price by 2022.
“Due to this fact, we anticipate a bigger discount (NPL) in 2021 with the goal of leaving the 2013 disaster behind us a minimum of in 2022. I consider that progress will proceed and that the issues inherited from 2013 will probably be very small. and manageable, ”he mentioned, including that NPLs will at all times exist on a financial institution’s steadiness sheet.
“They can’t be diminished to zero, so NPLs ought to be restricted to a small manageable quantity with good provisions,” he concluded.
Concerning the actual property belongings that the financial institution has absorbed below the debt-asset swaps amounting to 1.5 billion euros, Nicolaou mentioned the banks plan within the subsequent two or three to 4 years to cut back them to a manageable degree.
“We’re not landowners, we’ll drastically scale back our stock over the following three to 4 years to a manageable degree,” he mentioned.