The reduction of non-performing loans (NPLs) in Greece was just 0.6 pct between 2016 and 2017 but expected to accelerate going forward, according to the European Commission’s First Progress Report on the Reduction of Non-Performing Loans in Europe released on Thursday.
The report said that NPLs as a percentage of total loans in Greece were reduced from 47.2 pct in June 2016 to 46.9 pct in June 2017, while private loans posted a slight increase from 50.5 pct in June 2016 to 50.6 pct in June 2017.
Greece had the largest NPL ratio in Europe and its reduction was gradual but the country was only now emerging from a major economic crisis, European Commission Vice President responsible for the euro, Valdis Dombrovskis, said during a press conference on Thursday.
He explained that the deep and extended crisis was inevitably reflected in a NPL ratio in the country but noted that Greece had now entered a recovery phase in which the reduction of NPLs was expected to accelerate.
The report noted that the reduction of NPLs was the main pillar of the policy adopted in Greece in the financial sector, in the context of a financial assistance programme. The small increase in the percentage of loans could be linked to the delayed implementation of the Greek programme actions and the extended negotiations for the second review of the third economic adjustement programme, the report said.
It also noted that writing them off remained the key tool for tackling bad loans, though banks had so far met their nominal targets for reducing NPL ratios.
It also noted that the authorities had implemented a series of measures designed to offer banks additional tools for managing NPLs, such as an out-of-court debt settlement mechanism, electronic auctions and others.