Rising capital ratios, improving the NPL non-performing loan ratio and return on equity (RoE) significantly below banks' equity costs make up the picture of the eurozone banking system amid the COVID pandemic, according to the European Banking Authority.
The risk table published by the European Banking Authority yesterday includes, for the first time, data on loan moratoriums and government guarantee schemes applied / implemented by most euro area countries.
The ratio of non-performing loans in Cyprus is still the second highest in Europe, but has decreased significantly, mainly due to the purchase of loans by companies outside the banking system, write-offs and restructuring. At the end of September 2020, the index was at 14.3% from 15.5% at the end of June 2020. However, non-performing loans of the real estate sector in Cyprus are still among the highest in Europe, despite the significant leverage in recent years.
Greek and Cypriot banks are at the top of the countries with the highest bad loans in the construction sector. The NPLs index in the construction sector in Cyprus decreased to 53.3% at the end of the third quarter, from 54.7% in the second quarter of 2020 and 59.6% in the first quarter. It is followed by the construction sector in Greece, with the index of non-performing loans being 48.8%, from 49.9% in the second quarter and 53.8% in the first. Cyprus has another negative lead, with the banking system having the most problem loans in the real estate sector.
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