MNI: Italy Net Bad Loans Fall To E53.9 Billion In March: ABI

By Silvia Marchetti

     ROME (MNI) - The volume of net bad loans sitting on Italian lenders'

balance sheets fell to E53.9 billion in March, down from E54.5 billion a month

earlier, the Association of Italian Bankers said Tuesday.

     It is among the lowest levels seen in the last three years, as banks

continue to boost their financial solidity, reducing the stock of bad loans.

     March net bad loans dropped significantly, down by E32.9 billion from the

E86.8 billion peak of December 2016, the ABI said in its May outlook report.

     In the last 15 months the volume of bad loans has thus shrunk over 38%,

said the bank lobby.

     The ratio of net bad loans as a proportion of total lending stood at 3.11%

in March. At the end of 2016 the ratio was 4.89%, the highest since 2015. Before

the outbreak of the crisis in 2007, the ratio stood at 0.86%. The ratio of net

bad loans as a proportion of total bank assets (capital and reserves) fell to

12.13% in March from 16.83% a year earlier, the ABI said.

     --NPL STOCK FALLING

     The general downward trend in non-performing loans seems to be

consolidating, as lenders are cleaning their balance sheets. Progress has been

made in addressing excessive bad loans and bank recapitalisation needs.

     According to recent Bank of Italy data, the total stock of NPLs, net of

loan loss provisions, has fallen from a peak of E200 billion in 2015 to E140

billion at end of 2017.

     Italy's government passed a law in 2016 aimed at tackling the emergency

through a plan aimed at supporting lenders dispose of risky loans by speeding up

disposal procedures.

     Bank of Italy governor Ignazio Visco acknowledged that lenders had made

significant efforts in clearing their balance sheets, but called for the

creation of a NPL tradable market at European level.

     Market operators and public authorities have boosted efforts to create a

specific market for NPLs in order to reduce the remaining burden still weighing

on banks' balance sheets and hampering credit revival.

     The ABI report confirmed a consolidation in the lending revival to both

firms and households, with a+2.5% annual increase in April. The trough in the

country's prolonged credit crunch, triggered by the triple-dip recession, was in

2012, when lending fell 4.5%.

     In March, according to latest updated data by ABI, mortgage loans grew an

annual 2.7%, demonstrating that household consumption rates and purchasing power

were finally recovering.

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

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