In September 2013, nearly one in three loans (31.2%) was not paid, while almost one in two borrowers (45.8%) did not pay their credit card installments. This is one of NBG’s biggest problems, as well as commercial banks that seek a way to halt their progress. For this purpose, they have set up directories and proceed to massive refinancing.
According to NBG, the recession and the increase in tax burdens has led to the deterioration of the financial situation of households and businesses. As a result, credit risk has increased, while the ratio of non-performing loans to total loans has increased six-fold in the last five years (September 2013: 31.2%, December 2008: 5.1%). The formation rate of non-performing loans was subdued until 2010, but increased significantly in 2011 and 2012 as a result of the recession and widespread uncertainty that seems to affect trading behavior. The first nine months of 2013 showed signs of stabilization. As in previous years, at the end of September 2013, the highest percentage of non-performing loans was observed in consumer loans (45.8%), seeing as they usually are not -covered by collateral. Mortgage loans showed a lower percentage of delays (September 2013: 25.8%), while the corresponding rate for corporate loans was 31.2%.
Greek banks proceeded to make loan arrangements aiming to facilitate borrowers and reduce the formation of non-performing loans. At the same time, banks have sought to augment collateral to cover loans that have already been granted in order to reduce losses and impose stricter criteria for granting new loans.
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