Italy ABI: Bank Net Bad Loans To Drop 30% In Next Three Years

--Stable Economic Growth Path Seen Ahead

--Credit Revival Underway, Extra E140 Bln To Families In 2017/19

by Silvia Marchetti

     ROME (MNI) - Italy's banking lobby, the ABI, said Monday that the stock of

non-performing loans sitting on banks' balance sheets is expected to drop by

30%, a total of E30 billion, over the next three years as the country's

financial sector stabilises.

     In its Financial Outlook report, the lobby group also predicted 1.3%

economic growth for this year, higher than the Rome government's 1.1% forecast,

adding that GDP "will stabilize at this same level" for the following years, at

1.2% in 2018 and 1.3% 2019. 

     The ABI predictions for 2018-2019 are higher than those issued last week by

the International Monetary Fund, that set growth for both years at 1%.

     The government's budgetary targets will also be met. "At the end of 2019

the debt-to-GDP ratio will be lower by 5% compared to last year", the ABI said

adding that fiscal adjustment was on the right track. 

     By 2019 the ratio of NPLs to total bank loans is expected to fall to 2.7%,

though it could be even "lower" if banks further boost efforts to clean up their

balance sheets and free resources to the real economy. Bad loans should fall at

a annual average rate of 15%, added the lobby. 

     According to the report, over the next three years credit  made available

to residents (families and firms) is expected to increase by roughly E140

billion.

     The ABI also predicts an increase in financial solidity and revenues, as

lenders boost capital and curb spending through higher efficiency. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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