Proceded to execute purchase and sale agreements for 399 properties with a contract price of 111 million in nine months
At the end of September 2023, REMU managed properties with a book value of 983 million euros.
By Panagiotis Rougalas
Real estate sales by REMU (Bank of Cyprus Real Estate Management Department) since the beginning of 2019 amount to 900 million euros, while it took over real estate through debt to asset swap agreements in the same period, amounting to 500 million euros.< /p>
Asset sales span all property categories, with 40% of gross sales in the first nine months of 2023 being land.
According to the financial results for the nine months of 2023, which Bank of Cyprus presented with a profit of 349 million euros – in the nine months ending on 30 September 2023 – the Group completed real estate sales of 101 million euros, compared to 125 million euros in the corresponding nine months of 2022 At the same time, gains from property sales reached around €8 million for the nine months ending September 30, 2023, compared to around €12 million for the same period in 2022. Asset sales cover all property categories. , with 40% of gross sales for the nine months ending September 30, 2023 involving land.
Additionally, during the nine months ended September 30, 2023, the Group executed purchase and sale agreements for 399 properties with a contract price of €111 million, compared to purchase and sale agreements for 512 properties with a contract price of approximately €142 million by the corresponding nine months of 2022. Additionally, as recorded in the financial results of nine months, the Group was in advanced procedures for real estate sales amounting to €64 million (contract price) on September 30, 2023, of which €49 million related to signed purchase and sale agreements, compared to €82 million at 30 September 2022, of which €44 million related to signed purchase and sale agreements. Based on the data, REMU took on €18 million in real estate in the nine months ended September 30, 2023, compared with €84 million in additions in the corresponding nine months of 2022 through debt-for-real estate swaps and repossessed properties.
983 million plus stock
At the end of September 2023, REMU managed properties with a book value of €983 million, of which €947 million are categorized as repossessed properties. In more detail, they consist of €922 million of properties categorized as “Property Inventory” and €61 million as “Investment Properties”, compared to €1.11 billion at the end of 2022. At the time, they consisted of properties of 1.04 billion euros which were categorized as “Real Estate Inventories” and 75 million euros as “Investments in Real Estate”.
NPR at 3.5%
As reported in the financial results of Bank of Cyprus, non-performing loans based on the European Banking Authority (NPL) decreased by €13 million, or 3% in Q3 2023, compared to a net organic NPL decrease of €18 million .in Q2 2023, to 358 million as of September 30, 2023 (compared to 371 million as of June 30, 2023 and 411 million as of December 31, 2022).
As a result, NPLs represent 3.5% of total loans as of September 30, 2023, compared to 3.6% as of June 30, 2023 and 4% as of December 31, 2022. The NPL coverage ratio stands at 77% in September 30, 2023, compared to 78% on June 30, 2023 and 69% on December 31, 2022. “Taking into account collateral at fair value, NPLs are fully covered,” notes the Bank. “Overall, from their peak in 2014, NPLs have fallen by €14.6 billion, or 98% to below €0.4 billion, and the NPL-to-loan ratio by 59 percentage points, from 63% to below 4%.
“Rent Against Installment”
As announced in the results, in July 2023, the “Rent Against Installment” plan was approved by the Council of Ministers and aims to reduce NPLs with a primary residence mortgage and at the same time to protect the primary residence of vulnerable borrowers. Eligible criteria include borrowers with loans with a principal residence mortgage that were judged to be NPL on December 31, 2021 and remained NPL on December 31, 2022, with the market value of the principal residence not exceeding 250 thousand euros. At the same time, they included borrowers who had a completed application in the ESTIA scheme and had been deemed eligible but not viable, with the market value of the main residence not exceeding 350 thousand euros.
Additionally, all applicants who had been approved for the HESTIA scheme but had subsequently had their membership in the scheme terminated. Eligible applicants will be able to live in their primary residence as tenants and will be exempt from their mortgage as the government will fully cover the required rent on their behalf.
Eligible applicants, after the five years, they will be able to purchase the main residence at a favorable value, lower than its market value.
To date, the plan is not in place and aims to act as yet another tool for dealing with NPLs in the retail banking sector which will help to further reduce NPLs and the Bank of Cyprus.
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