Levels of non-performing loans (NPLs) in Central and Southeast Europe (CE/SEE) continued to decline in 2015 but still remain worryingly high, reported the Vienna Initiative of cross-border banks in Emerging Europe.
As of December 2015, NPLs amounted to €55.5bn, a fall of 6.5% (or €3.9bn) on December 2014 levels. This figure represents 5.1% of GDP in the region, and 7.7% of gross loans. In December 2014 the NPL/gross loans ratio was 8.4%.
Nevertheless NPL ratios exceeded 10% in 10 of the 18 CE/SEE countries, with highs of 21.6% in Serbia, 20.6% in Bulgaria, 18.2% in Albania and 16.3% in Croatia.
All countries with the exception of Romania (+1.4% y/y), the Czech Republic (+1.7% y/y), Macedonia (+4.7% y/y) and Bulgaria (+20% y/y) showed a fall in NPL volumes.
In terms of NPL/gross loans ratios, all countries with the exception of Latvia (up 0.04 percentage point), Serbia (+0.1pp) and Bulgaria (+3.9pp) showed a fall.
Across the region the NPL coverage ratio (measured as the proportion of loan loss provisions to NPLs) increased from 59.4% in December 2014 to 60.9% in December 2015, an increase of 1.5pp y/y.
The most vulnerable countries in terms of higher NPL ratios and lower NPL coverage ratios than the average were Bulgaria, Montenegro and Romania. In Bulgaria NPL volumes rose by 20% to €5.7bn, the ratio to gross loans rose 3.99pp to 20.6%, and the coverage ratio fell 0.7pp to 48.8%.
The reduction in NPL volume across the region was primarily attributable to decreased NPL stock in Hungary (€2.6bn, -33.5% y/y), Slovenia (€0.9bn, -22.1% y/y) and Albania (€0.2bn, -19.6% y/y). In Hungary and Slovenia this was a result of sales of NPLs, while in Albania banks were forced to write off loans of more than three years in the lost category.
Over the last 18 months, approximately €6bn in NPL transactions have been realised in the CE/SEE region, with Romania, Poland and Slovenia accounting for over 75% of the total sale value.
In 2015 €4bn of sales were realised, representing 7.2% of NPL stock as at December 2015. There was a huge surge of transactions in the second half of the year in Romania – making up three-quarters of that period’s sales – which was driven by recent write-offs.
In the first half of 2016 sales were down 15.5% on the second half of 2015, but up 30.1% y/y. Romania, Poland, Slovenia and Hungary accounted for 29%, 21% and 19% of the total transaction value respectively.
In the second half of this year there have been already six realised transactions, the Vienna Initiative reported, three of which were in Romania.
Albanian Defense Minister Olta Xhacka said that Tirana wants more investments by the US military industry in Albania, after a US company launched work on the installation of the Integrated ... more
Boyko Borissov, prime minister of the current EU Council chair Bulgaria, called on April 10 on the leaders of the Western Balkan countries to preserve peace and ... more