MNI: Italy Net Bad Loans Fall To E54.5 Billion In Feb - ABI

By Silvia Marchetti

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

balance sheets fell to E54.5 billion in February, down from E60 billion a month

earlier, Italy's Banking Association said Tuesday.

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

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

     February net bad loans fell significantly, down E32.3 billion compared to

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

report. In the last 14 months the volume of bad loans has  shrunk over 37%, said

the lobby.

     The ratio of net bad loans as a proportion of total lending stood at 3.16%

in February. 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 just 0.86%.

     The ratio of net bad loans as a proportion of total bank assets (capital

and reserves) fell to 12.36% in February, down from 16.69% a year earlier, the

ABI said.

     The general downward trend in NPLs seems to be consolidating, as lenders

clean 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 the end of 2017. 

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

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

disposal procedures.

     Bank of Italy's governor Ignazio Visco recently acknowledged that lenders

had made significant efforts in cleaning their balance sheets, but again called

for the creation of a Europe-wide NPLs market.

     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 also confirmed "consolidation" in the recent lending revival

to both firms and families, with a 2.1% annual increase in March. The trough in

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

was in 2012 when it fell 4.5% y/y.

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

annual 3.6%, demonstrating that family consumption rates and purchasing power

were finally recovering as the economy picks up.

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

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