Irish Banks reduce non-performing loans below 15% based on recent EBA figures – Hayes
All Irish banks should target an NPL ratio of below 5% by 2018
Brian Hayes MEP today said that Irish banks have reduced their non-performing loan ratio to 14% as of June 2016, compared with 19% in December 2015, as demonstrated by the latest European Banking Authority (EBA) figures.
“Irish banks have made rapid reductions in their non-performing loan portfolios as demonstrated by EBA figures released last Friday. Unfortunately Ireland has the 6th highest non-performing loan ratio out of all 28 Member States but we are making some progress in reducing this figure.
“NPLs did peak in Ireland in late 2013 and have not seen a rapid reduction since then but the latest EBA figures should give us some positive indication that Irish banks are working hard on reducing their NPL portfolios.
“The EBA’s latest assessment shows that Ireland is still stuck with the sixth highest ratio of non-performing loans in the EU behind Cyprus, Greece, Portugal, Italy and Slovenia.
“Yet we must consider that the figure of 14% is still far too high; Irish banks need to continue looking at innovative ways of cleaning up their balance sheets by selling or restructuring NPLs.
“This is a legacy issue from the crisis and it continues to be a drag on Irish banks. But we need to have a clear target because the situation is too precarious if action is not taken.
“I am calling on all Irish banks to make a target of reducing their non-performing loan ratio to below 5% of assets by the end of 2018. I want to have a strong banking sector in Ireland. I am aware that serious difficulties still face the banks but our economy will never be stable enough if our banks are not in a solid position and can provide a proper lending facility to businesses and households.”
“The average ratio of NPLs in all EU banks is 5.7% – this is more than treble that of other large banking sectors. So when compared with other regions, Irish banks fare quite badly. It is welcome that the ECB, through the Single Supervisory Mechanism has started setting targets for banks to reduce their bad loan books.
“There was significant media attention given to an ECB report on NPLs published in September which said that Irish banks had a NPL ratio of 19% – yet this figure was based on the 4th quarter of 2015.