Non-performing loan ratio increases

Stelios Orphanides
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Non-performing loan ratio increases

Cyprus non-performing loan (NPL) ratio increasesNON-PERFORMING loan (NPL) ratio in the Cypriot banking system rose to 48.9 per cent in February from 45.8 per cent in December, the Cyprus Central Bank said.

In February, total non-performing loans dropped by €16.8m, to below €26.8bn, compared to the previous month, and rose by €80.7m compared to December the Central Bank said in a statement on its website on Friday. The increase in the ratio in the first two months of the year, compared to December, was due to a gradual drop in overall loans by almost €3.5bn to €54.7bn as a result of “loan repayments by foreign-owned entities operating abroad”.

Total 90 days past due loans fell to below €20.8bn, from €21bn respectively, the bank supervisor said, adding that this was a “positive development”. Total restructured facilities rose by €88m to over €14.2bn in February compared to December. In addition, more than €10.9bn in restructured loans were classified as non-performing in February, compared to €10.7bn in December.

“In January and February 2016, there were loan restructurings worth almost €1bn,” the Central Bank said, adding that 76 per cent of loans restructured after January 1, 2014 to February 29, this year, “meet the new repayment schedule agreed as part of the restructuring agreement”.

The net balance of restructurings, as formulated at the end of each month, is also affected by both loan repayments and the reclassification of facilities after a 12-month probation period for restructured loans expires, it said.

In the first two months of the year, a total of €205m in restructured loans were removed from the non-performing loan classification and were categorized as performing after the probation period was completed.

Out of 16,496 applications for loan restructurings which were pending in December, plus those added in the first two months of the year, there were agreements for 4,528, or 27,5 per cent, while the final decision for 10,763 cases, or 65.4 per cent, was shifted to the next month, the central bank added. A total of 1,185 applications for loan restructurings or 7.2 per cent, were rejected.

“These figures demonstrated the great effort being made,” the supervisory authority said.

Total provisions for loan impairments fell in February to €9.9bn from €10bn in December.

At the end of 2014, non-performing loans, restructured loans, and loans with more than 90 days in arrears, stood at €27.3bn, €12.9bn and €22bn respectively. Total provisions for loan impairments at the end of 2014 stood at almost €9bn.

The total amount of household non-performing loans rose in February by €132m, to €12.8m, in February compared to December, while it fell in the case of non-financial corporations and financial corporations by €32.4m, to €10bn, and by €15.m, to €665m, respectively, the central bank said.

Summary data for all banks (excluding overseas operations of Cypriot banks)
29/02/2016 31/01/2016 31/12/2015 30/09/2015 31/12/2014
€million €million €million €million €million
Total Facilities 54.721 54.918 58.204 57.179 57.224
Non-Performing Exposures 26.766 26.783 26.685 27.328 27.328
Exposures with amounts past due >90 days 20.758 20.991 21.007 22.100 22.015
Exposures with forbearance measures (restructured facilities) 14.242 14.137 14.154 13.956 12.860
of which continue to be classified within non-performing exposures 10.915 10.799 10.713 10.402 9.234
Accumulated impairment (provisions) 9.927 9.975 10.015 9.352 8.974

Fitch affirms Cyprus at B+

Nigel Howarth
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Fitch affirms Cyprus at B+

Fitch ratings affirms Cyprus at B+FITCH Ratings said that “Cyprus is undergoing a major financial sector, fiscal, and economic adjustment following the 2013 banking sector crisis and the ensuing EU/IMF bail-out programme” and noted that “the country’s early exit from the macroeconomic adjustment programme in March 2016 reflects a track record of fiscal consolidation, progress in financial sector restructuring and economic recovery”.

It added, however, that a number of factors “continue to weigh heavily on Cyprus’ credit profile”, noting that the government debt was close to 109% of GDP in 2015, “reducing Cyprus’ fiscal scope to absorb domestic or external shocks” and the banking sector’s “exceptionally weak asset quality”, with assets four times the country’s GDP, which “undermines economic stability and growth”.

“The country’s weak external position implies that further economic rebalancing may be in prospect over the medium term” Fitch said.

The rating agency also noted that economic recovery is underway, following three years of contraction resulting in a cumulative 11% loss of output until end-2014 and projects GDP growth of around 2% per year for 2016-17, supported by household consumption benefiting from a decline in unemployment, and a pickup in tourism and investment.

Furthermore it said that banks remain fundamentally weak and pose an ongoing risk to the economy and public finances. “The ratio of consolidated sector NPEs (non-performing exposures) to total loans stood at 45% in December 2015, one of the highest of Fitch-rated sovereigns, though down from a peak of over 50% in 2014”.

“Major steps have been taken to restructure the banking sector” the rating agency said, however, “some 30% of restructured loans since January 2014 were in arrears (including of short duration) by end-2015”.

Fitch projects budget surpluses of 0.2% and 1% of GDP for 2016 and 2017, respectively, “reflecting a neutral fiscal stance that is supported by the economic recovery”. The gross general government debt is projected by Fitch to decline to below 100% by 2017.

Fitch sees progress with structural reforms, including selling the Limassol port and Casino, however it said that a number of bills are currently awaiting discussion in parliament following the May elections. “The improved economy and exit from the adjustment programme could reduce the urgency for reform”.

It noted that a deal on the solution of the Cyprus problem “would benefit both sides”.

Rating sensitivities

Fitch highlighted a number of sensitivities that could lead to possible upgrades and downgrades in the country’s credit ratings.

Possible upgrades may result from:

  • Further signs of a stabilisation in the banking sector, including a pick-up in loan restructurings.
  • Further track record of economic recovery and reduction in private sector indebtedness.
  • Continued fiscal adjustment leading to a decline in the government debt-to-GDP ratio.
  • Narrowing of the current account deficit and reduction in external indebtedness.
  • A sustained track record of market access at affordable rates.

Possible downgrades may result from:

  • Re-intensification of the banking crisis in Cyprus.
  • A reversal of fiscal discipline, resulting in a less favourable trajectory in debt-to-GDP.
  • A return to recession or deflation with adverse consequences for public debt.
  • A lack of market access, putting pressure on government and banking system liquidity.

Plans for luxury apartments in Larnaca

Evie Andreou
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Plans for luxury apartments in Larnaca

A LEBANESE investor who has purchased land worth €3.5m in Larnaca on Tuesday announced plans to invest a further €15m to build luxury apartments on the site.

Yussef Kanaan, who represents investors from Lebanon, said within the week he expects to submit the architectural plans to get a building permit.

“We think Cyprus is a very good place for investment, especially the city of Larnaca. We want to start construction by June,” Kanaan told state broadcaster CyBC. He added that they will hire local contractors for the job.

He also said that the close proximity of Larnaca to Lebanon, twenty minutes by plane, makes the town an attractive destination for Lebanese people.

Larnaca deputy mayor Petros Christodoulou welcomed the move and said that investments in the tourism sector are among the priorities of the town.

Last year, the Larnaca municipality sold off the land formerly housing the town hall for €5 million to Russian Lanomex Development Ltd which plans to construct a luxury five-star hotel, a shopping complex, apartments, offices and recreational and leisure developments in the Phinikoudes area.

Bids submitted for Ayia Napa marina

Staff Reporter
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Ayia Napa Marina
Ayia Napa Marina – Source G. Caramondanis Investments Ltd

SEVEN leading construction companies have submitted their bids as plans for building an Ayia Napa marina are entering their final stage according to a report published yesterday by in-cyprus.

The company M. M. Makronisos Marina Ltd is in charge of the project, with Egyptian billionaire Naguib Sawiris participating in the ownership.

The company has received offers from seven bids for the construction of the marina, with costs estimated in the tens of millions of euros. M. M. Makronisos Marina is currently evaluating the proposals and is expected to begin construction in the second half of 2016.

The consortia and companies that submitted offers are:

  • Salini Impregilo SpA (Italy)
  • Terna SA (Greece)
  • Consortia BESIX and J&P (Belgium and Cyprus)
  • Consortia JSC Mezhregiontruboprovodstroy, MCS Maritime Crew and Equipment, Poullaides Construction Company Ltd (Russia and Cyprus)
  • Aktor S.A. (Greece)
  • Consortia Metka SA, Medcon and Archimedes (Greece and Cyprus)
  • Consortia Cidonio, Piacentini and Cybarco (Italy and Cyprus)

The Italian company Salini Impregilo is one of the country’s largest construction groups, that also works internationally. The Milan-based company, founded in 1958, also offers engineering services. After a series of mergers and acquisitions the group became a protagonist in the Italian economy, employing over 34,000 people and a turnover of over €4 billion. The group’s international projects are usually large-scale.

The Greek group Terna is a collaboration of the companies GEK and Terna. The group numbers beyond 3,000 people as personnel with a turnover of around € 2 billion.

Belgian BESIX is one of the country’s most important construction companies with a history since 1909, personnel numbering over 18,000 people, and a turnover of €2 billion. J&P is also participating in the BESIX consortia for the construction of the Ayia Napa marina. J&P was founded in 1941 by Gogos Paraskevaidis and Stelios Ioannou. The group has an important presence in Cyprus, Greece, the Middle East and North Africa, employs over 13,000 and has an annual turnover of €600 million.

The Russian company JSCMezhregiontruboprovodstroy, based in Moscow specialises in underwater infrastructure projects. Christos Poullaides’ company participates in the consortia. Poullaides Construction Company(Cyprus) was founded in 2002 in Bahrain where its projects number in the dozens, including commercial buildings, house buildings, fuel stations, closed football fields and factories.

The Greek company Aktor is the construction branch of the Ellaktor Group, owned by the Bobolas family. Aktor is one of the largest construction groups in Greece, with a turnover of over €1 billion and a presence in over 17 countries. Aktor was founded in Greece in 1950.

Greek company Metka, founded in 1962 is a branch of the Mytilineos Group. It specialises in the construction of large-scale projects, with a turnover of over 1 billion euros. The construction company Medcon of the Karantokis group also participates in the consortia, specialising in road works and infrastructure projects. Another company, Nicosia-based Archimedes, is also a part of the consortia and specialises in metallic construction.

The Italian group Impresa Pietro Cidonio specialises in water works, but also in engineering projects for land and underwater. Piacentini Costruzioni also participates in the consortium which deals with the construction of large works such as bridges, road works, ports, marinas, airports and multi-purpose buildings. The group has constructed works outside of Italy, in the Middle East, North Africa, Latin America, and Asia. The Cypriot company Cybarco is also part of the consortium. The Lanitis-owned company has seventy years in the field of construction, with the Limassol marina and the under-construction The Oval in Limassol being among the company’s recent works.

Copyright © 2014 Phileleftheros Public Company Ltd

Property sales continue to improve

Nigel Howarth
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Property sales continue to improve

Cyprus property sales improveTHE NUMBER of property sales in Cyprus during March 2016 increased by 19 per cent compared with March 2015 according to the latest official figures issued by the Department of Lands & Surveys.

The 19% increase in March follows a 54% increase in February and a 2% increase in January. Increases have been recorded for the last seven months and it seems that a recovery in the property market may be underway after years of decline and stagnation.

March saw a total of 539 contracts for the sale of commercial and residential properties and land (building plots and fields) being deposited at Land Registry offices across the island.

Of those 539 contracts, 71% (382) were deposited by domestic (Cypriot) purchasers, while 29% (157) were deposited by overseas (non-Cypriot) purchasers.

Although sales fell by 1% in the capital Nicosia, they rose in all the other districts. Sales in Famagusta increased by 94% compared with March 2015, while sales in both Larnaca and Limassol increased by 23%, with sales in Paphos up by 19%.

Total Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 46 45 83 88 86 61 60 37 65 64 60 54
2016 54
 79
 82
Famagusta 2015 16 27 17 17 21 33 45 14 30 29 33 42
2016 22
 35 33
                  
Larnaca 2015 90 71 98 67 68 111 95 75 85 87 111 114
2016 78
 108 121
                  
Limassol 2015 95 97 160 115 135 135 156 87 114 166 137 169
2016 92
 179 197
                  
Paphos 2015 74 85 94 94 95 124 140 88 91 117 105 134
2016 81
 100 106
                  
Totals
 2015 321 325 452 381 405 464 496 301 385 463 446 513
2016 327
 501 539
                  

During the first quarter of 2016 sales have risen 24% to reach 1,367 compared with 1,098 sales during the first quarter of 2015.

Domestic property sales

Property sales to the domestic (Cypriot) market in March fell 7% compared to March 2015, with sales reaching 382 compared with 411 in March last year.

Although sales in Famagusta and Nicosia rose 31% and 1% respectively, they declined in Paphos, Larnaca and Limassol by 31%, 7% and 1% respectively.

Domestic Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 39 36 71 74 74 58 56 36 55 60 50 44
2016 43
 70
 10
Famagusta 2015 9 2 16 16 9 30 28 14 25 24 24 41
2016 20 31 21
                  
Larnaca 2015 77 49 91 40 45 82 60 62 53 59 81 81
2016 68 96 85
                  
Limassol 2015 71 77 147 90 86 100 123 65 81 127 82 123
2016 68 158 145
                  
Paphos 2015 39 38 86 64 34 63 83 64 47 92 71 89
2016 61 72 59
                  
Totals
 2015 235 202 411 284 248 333 350 241 261 352 308 378
2016 260 427 382
                  

Domestic sales during the first quarter of 2016 are up 26% compared with the first quarter of 2015 with sales reaching 1,069 compared to last year’s figure of 848.

Overseas property sales

In contrast with domestic sales, property sales to the overseas (non-Cypriot) market rose 283% in March compared with March 2014 with 157 properties being sold compared with just 41 in the same period last year.

With the exception of sales in the capital Nicosia, where sales declined 17% compared to last year, they rose in all other districts.

In percentage terms sales in Famagusta rose 1,100% (increasing from just 1 in March 2015 to 12 in March 2016). Meanwhile sales in Paphos rose 488%, sales in Larnaca rose 414% and sales in Limassol rose 300%.

It should be borne in mind that that these increases are from a very low base, but the signs are positive that a recovery in the overseas property market may be under way.

Overseas Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 7 9 12 14 12 3 4 1 10 4 10 10
2016 11
 9
 10
Famagusta 2015 7 25 1 1 12 3 17 0 5 5 9 1
2016 2 4 12
                  
Larnaca 2015 13 22 7 27 23 29 35 13 32 28 30 33
2016 10 12 36
                  
Limassol 2015 24 20 13 25 49 35 33 22 33 39 55 46
2016 24 21 52
                  
Paphos 2015 35 47 8 30 61 61 57 24 44 35 34 45
2016 20 28 47
                  
Totals
 2015 86 123 41 97 157 131 146 60 124 111 138 135
2016 67 74 157
                  

Sales to the overseas property market during the quarter of 2016 are up 19% compared with the first quarter of last year with sales rising to 298 compared to last year’s figure of 250.

Cyprus Property Sale Transactions 2000 – 2016

Year Overseas Sales Domestic Sales Percentage
Overseas Sales		 Total
Sales
2000 450 12,214 3.6% 12,664
2001 1,207 12,849 8.6% 14,056
2002 2,548 14,111 15.3% 16,659
2003 3,981 15,294 20.7% 19,275
2004 5,384 11,947 31.1% 17,331
2005 6,485 10,106 39.1% 16,591
2006 8,355 8,598 49.3% 16,953
2007 11,281 9,964 53.1% 21,245
2008 6,636 8,031 45.2% 14,667
2009 1,761 6,409 21.6% 8,170
2010 2,030 6,568 23.6% 8,598
2011 1,652 5,366 23.5% 7,018
2012 1,476 4,793 23.5% 6,269
2013 1,017 2,750 27.0% 3,767
2014 1,193 3,334 26.4% 4,527
2015 1,349 3,603 27.2% 4,952
2016 (Mar)
 298 1,069 21.8% 1,367
Totals
 57,103 137,006 29.4% 194,109

 

Cyprus house prices fall

Nigel Howarth
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Cyprus house prices fall

Cyprus house pricesHOUSE prices in Cyprus fell 4.2 per cent during the fourth quarter of 2015 compared with the previous quarter and by 0.6 per cent compared with the fourth quarter of 2014 according to figures published on Tuesday in a Eurostat news release.

According to the news release house prices in the euro area rose by 2.9% and by 3.8% in the EU in the fourth quarter of 2015 compared with the same quarter of the previous year.

Compared with the third quarter of 2015, house prices remained stable in the euro area and rose by 0.2% in the EU in the fourth quarter of 2015.

The highest annual increases in house prices during the fourth quarter of 2015 in EU Member States were recorded in Sweden (+14.7%), Hungary (+10.3%), Ireland (+8.9%) and the United Kingdom (+7.1%), while the highest falls were observed in Croatia (-2.1%), Lithuania (-2.1%), and Austria (-1.7%).

In the same report, the highest quarterly increases were recorded in Bulgaria (+3.1%), Latvia (+2.3%) and the Sweden (+2.0%) and the largest falls in Cyprus (-4.2%), Lithuania (-2.1%) and Austria (-1.7%).

Further reading

Eurostat news release 68/2016 – 12 April 2016

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