Fitch: Greek Banks to Improve Asset Quality in Next Two Years

Αssociated Press

FILE - An elderly man leaves a branch of the National Bank of Greece in Athens. (AP Photo/Thanassis Stavrakis, File)

ATHENS -- The Greek banks' portfolio of impaired loans will fall below 30 pct by the end of 2021, from 36 pct in the end of September, if Greek credit institutions implement their planned significant securitisations in the framework of the "Hercules" plan, Fitch Credit Ratings said in a report on Wednesday.

The credit rating agency said that additional measures by banks to boost their capital base and a likely extension of the "Hercules" plan will further accelerate the improvement of Greek banks' asset quality in the next two years. "The four systemic banks plan to reduce their impaired loans to below 10 pct of total portfolio by the end of 2022. Despite an, up to a certain degree, forward-bringing of provision-making in the first half of 2020, we expect provisions for non-performing loans to remain high in 2021 (from 1.5 pct up to 1.7 pct of total loans) due to banks' efforts to accelerate a restructuring of the assets' quality," Fitch said.

Fitch said that countries with high NPLs stock, such as Greece, Ireland, Italy and Portugal, that made greater use of moratoria to suspend loan payment because of the pandemic, will face greater inflows of NPLs after the end of moratoria.