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NICOSIA, March 21 (Xinhua) -- Non-performing loans in the banking system of bailed out Cyprus have dropped to a two-year low in last December, but its ratio in the total loans is still high, according to a statement of the Central Bank of Cyprus (CBC) on Tuesday.
Figures from the CBC statement published on its website show that non-performing loans fell by nearly 3.7 billion euros to 23.7 billion in December, 2016, the lowest since December, 2014.
But non-performing loans still comprise 47 percent of total loans, CBC said in the statement.
At the onset of the crisis in 2013, non-performing loans topped 50 percent.
The high-ratio of non-performing loans relative to the total loans is the result of fewer loans being approved by banks, since the Cypriot banking system was resolved as part of the eastern Mediterranean island's 2013 bailout.
CBC's statement said the amount of restructured loans rose in the last two years by 530.4 million euros to 13.2 billion euros in December.
About 72 percent of restructured loans are being serviced regularly and have the prospect of being reclassified as performing loans after a probation period of 12 months set down by the European Central Bank (ECB).
The ECB probation period is also a reason behind the high ratio, since loans restructured last year are not reflected in bank accounts.
CBC warned that an expected increase in interest rates by the ECB as inflation in the euro area has started to pick up and a cut back in its asset purchase program could have a negative effect on the ability of borrowers to service their loans as they could be faced with higher borrowing rates. Enditem
