ATHENS, April 5 (Reuters) - Greek banks’ exposure to doubtful and non-performing loans edged down in the fourth quarter but still made up half the sector’s overall loan book, the central bank said on Wednesday.
Banks, which entered the country’s economic crisis in 2008 with non-performing exposures (NPEs) of 14.5 billion euros ($15.4 billion) or 5.5 percent of loans, saw them soar to 106.9 billion or 50.5 percent at the end of last June.
They trimmed that to 104.8 billion euros or 50.0 percent, excluding off-balance sheet items, in the final three months of last year, beating targets, the central bank said.
The mountain of NPEs, comprising non-performing loans (NPLs) plus restructured loans likely to turn bad, is the biggest challenge facing the Greek banking system. Its reduction would free up capital to fund productive sectors of the economy.
The non-performing loan rate fell to 36.2 percent, beating a targeted 36.4 percent.
“The NPE ratio remains high across most asset classes,” said the central bank, which monitors the implementation of lenders’ NPE action plans in cooperation with the European Central Bank.
Banks have agreed with regulators on ambitious bad debt reduction targets over three years.
Greece’s four major banks - Piraeus, National , Eurobank and Alpha - and three less systemic banks submit data on nine operational targets.
Their aim is to cut the NPE to 66.7 billion euros by 2019 from 106.9 billion euros last September. The NPL rate is targeted to fall to 20.4 percent from 37 percent.
$1 = 0.9388 euros Reporting by George Georgiopoulos; editing by John Stonestreet