CEE region became attractive for investors, due to the improvement of economic conditions, coupled with an increase in provisioning following the AQR exercises in several of the CESEE countries.
Most of the completed deal volumes were registered in Romania (37%), followed by Hungary (24%), Poland (11%) and Slovenia (9%), according to the report
According to the report, in 2016, NPL investors showed a growing interest for retail mortgage portfolios in certain countries and this tendency is also expected in 2017. Transacted corporate portfolios amounted to EUR4.8 billion in 2015 and up to October 2016, whereas both residential portfolios and consumer loans to EUR 1.6 billion.
”In 2017, Romanian banks want to lower the 10% NPL ratio registered at the end of 2016, thus they will target to reduce the difference between the current level and the European average of 5%. In this context, I expect to see four-five NPL transactions this year, each with nominal values of several hundreds of millions of euros,” said Radu Dumitrescu, Partner Deloitte Romania.
Deloitte NPL Study key findings:
• Sale of non-performing loan portfolios further increased in 2016 compared to 2014 and 2015 due to the increasing interest of NPL investors in the CEE region and the greater willingness of banks to dispose of portfolios.
• Although investors turned their interest towards retail mortgages as well, servicing capacity is still a concern for many investors.
• Based on our expectations for 2017, NPL transaction activity will level off or possibly further increase as NPL investors become more comfortable with the region.
• The role of restructuring is likely to grow in the forthcoming years which will help further NPL reductions.
• It should be noted though that NPL ratios in the region moving forward will be impacted by whether forborne loans can stay healthy on a long term basis or whether they enter default again
The fifth edition of Deloitte NPL Study analyzed the NPL markets in twelve countries: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Serbia, Slovakia and Slovenia.