Banks miss bad-loan reduction goal

A report by the Bank of Greece on the decline of nonperforming exposures (NPEs) on Thursday served as a warning for local lenders, because it shows that in the first half of the year Greek banks missed out on their commitment on bad loan reduction.

Nonperforming loans (debts delayed by over 90 days) amounted to 60.9 billion euros at the end of June, while the target had been for their reduction to 60.6 billion. The 300-million-euro lag is reversible but it still creates concerns as it happened in the context of economic growth and a drop in unemployment.

A more encouraging element in the central bank's report concerns the reduction of NPEs (NPLs and loans which are unlikely to be repaid in full without collateral realization). NPEs amounted to 88.6 billion euros against a a target of 90.2 billion for end-June, thereby creating a cushion of 1.6 billion.

The lagging...