NPLs likely to jump after shutters go up

Nonperforming loans have increased dramatically in the last few weeks as hundreds of households and enterprises have stopped making their repayments either due to a genuine inability to pay or because of the general uncertainty in the economy that has seen transactions freeze.

Data from banks show that repayments declined to between 20 and 50 percent of performing loans, creating the conditions for a major increase in bad loans. This trend is in line with the estimates of the Bank of Greece, according to which NPLs amounted to 40 percent of the total at the end of 2014, with the likelihood they will grow further in the first half of the year.

The total amount of bad loans (those which have remained unserviced for at least 90 days) has reached 100 billion euros, and the BoG data show that 70 percent of the loans that have entered payment programs remain nonperforming.

Although the recent deterioration is not yet reflected in the official indices, as it concerns payment delays of one or two months, the picture banks present is one of hundreds of households in payment schemes freezing their payments and entering the stage of partial delay. However, we will not get an idea of the full picture as long as banks remain closed.