Non-performing loans (NPLs) in Greece dropped by 4.2 pct in the second quarter of 2018 compared to the same period last year, according to the European Commission’s third progress report on risk reduction in the EU released on Wednesday.
According to the report, Greece reduced its NPL rate as a percentage of all loans from 46.9 pct to 44.9 pct, although it still retains the highest rate of all EU member-states.
Cyprus holds the second-highest rate in the EU (28.1 pct of all loans are NPLs), with a reduction of 16 pct compared to the second quarter of 2017 (33.4 pct). The island republic is followed by Portugal (11.7 pct, compared to 15.5 pct in Q2 2017), Italy (10 pct, over 12.2 pct ), Ireland (8.5 pct over 11.6 pct) and Slovenia (7.4 pct, over 11.4 pct).
Overall, NPLs in the European Union averaged a total of 3.4 pct over 4.6 pct at the same quarter last year, a 25.3 pct reduction.
The Commission called the results encouraging, despite the need to continue dealing with old issues that are weighing on the banking section since the beginnings of the crisis.
Commission Vice President Valdis Dombrovskis said there was still work to be done, especially in Greece and Cyprus, where the original NPL debts were very high to begin with. He added that the system of e-auctions of foreclosed property is starting to show results already.
Asked to also comment on the merging of Eurobank with Grivalia, Dombrovskis said that the European Commission is reviewing it and may need more details. It appears the bank is fulfilling its obligations since 2015 in whatever relates to Greek state subsidies, he said.
The report said overall that “financial stability has been considerably reinforced in recent years and risk reduction in the EU banking sector is continuing at a sustained pace, as outlined by the Commission in two Communications ahead of the December European Council and Euro Summit, where decisions on the deepening of Europe’s Economic and Monetary Union should be taken. At the same time, the work on financial stability and integration needs to continue, and it is now time for the co-legislators to agree on all key outstanding files.”
Adding to this, Dombrovskis said, “On the basis of the progress achieved on the risk-reduction side, I invite EU Finance Ministers and leaders to agree on concrete risk-sharing measures in December. Stronger Economic and Monetary Union is in the interest of each and every one.”