Few Bank of Cyprus customers were able to make use of the second moratorium on the suspension of capital and interest payments, announced in January 2021, which concerned those affected by the second imposition of restrictive measures. This is because most customers had completed nine months by making full use of the measure in the first announcement.
The application period ended on January 31, 2021 and applications for loans of approximately € 27 million have been submitted. By mid-February 2021, loans of approximately € 17 million have been approved for the second project. The close monitoring of the quality of loans under the suspension of capital and interest payments continues, as noted by the Bank of Cyprus.
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Regarding the first moratorium and the end of the end of December 2020, the messages given, at least for the time being, by the Bank's customers, are quite encouraging. More than 25,000 borrowers were approved for loans of approximately € 5.9 billion as of December 31, 2020 (consisting of € 2.1 billion in retail loans and € 3.8 billion in corporate loans) and represent 64% of the total of loans. According to the Bank of Cyprus, the moratorium on the payment of capital and interest payments (moratorium) for all these loans expired on December 31, 2020 and their return after the end of the moratorium on payments is encouraging, as € 3.6 billion had installments up to on February 15, 2021, and 95% of them paid their installment. The close monitoring of the quality of these loans continues and solutions are offered to customers whose loans start to show arrears.
Specifically, 82% of the loans to individuals under the suspension of capital and interest payments had an installment payment until February 15, 2021 and 93% of them paid their installment. At the same time, loans amounting to approximately € 240 million were reclassified from Stage 1 to Stage 2 in 2020, mainly due to the significant increase in credit risk resulting from the deterioration of macroeconomic assumptions and due to management adjustments. Respectively, 51% of loans to companies had an installment payment until February 15, 2021 and 97% of them paid their installment, while at the same time loans amounting to approximately € 450 million were reclassified from stage 1 to stage 2 in 2020.
The Bank of Cyprus in the presentation of results states that it has a well-diversified loan portfolio of serviced loans. At the end of 2020, tourism loans were limited to € 1.1 billion out of a total of € 9.2 billion in loans, of which approximately 90% were under a moratorium. About one third of these loans had an installment payment by February 15, 2021 and 98% of them had paid their installment. Bank of Cyprus notes that the majority of customers in the housing sector entered the crisis with significant liquidity, due to the strong returns of recent years. In 2020, the decrease in tourist arrivals from abroad was partially replaced by domestic tourism, a trend that is expected to continue in 2021.
A recovery in the tourism sector is expected from the second half of 2021 and will be linked to international vaccination programs, noting that countries such as the United Kingdom and Israel, from which more than 40% of tourist arrivals come, are currently in quite advanced stage in the following vaccination programs. Trade loans were limited to € 0.9 billion, of which approximately 53% were under suspension of capital and interest payments which expired at the end of 2020. 68% of loans had installments by February 15, 2021 and 97% of them paid their installment. Significantly, about 30% of trade loans are related to basic low-risk retail services, which were not significantly affected by the pandemic.
