(Finance) – Bank bad debts continue to reduce: in 2022, approximately positions were closed (eliminated from balance sheets). 22 billiona value equal to approximately 4 times the value of new entries and higher than 2021 in both absolute terms (17 billion) and in terms of percentage on bad debts outstanding at the end of the previous year (64% against 42%). This is what emerges from a Bank of Italy report relating to the recovery rates of bank bad debts.
The increase compared to 2021 – explains the Institute – is mostly attributable to sales (increased from 14 to 18 billion), while the amount of positions closed on an ordinary basis (late debt payment) remained substantially stable compared to the previous year (around 4 billion).
Compared to previous years, the use of securitisations in relation to the total sales it was less, also taking into consideration the fact that from 14 June 2022 GACS are no longer available. GACS assisted almost all the main bad loan securitization transactions (5.4 billion, 82% of the securitized bad loans). Unlikely to pay loans increased to 7 billion (5.7 billion in 2021).
Faster disposal times
Continues improvement in disposal times in place since 2015, which benefits both from the reduction in amounts and low rates of entry into non-performing loans, and from the progress achieved by intermediaries in the management of these loans.
The share of positions closed within a year from classification to non-performing has progressively increased (from 38% for positions entered in 2015 to 65% for those of 2021). The updated data also shows that 85% of the positions is closed within three years from entry to suffering.
Growing recovery rates
Compared to 2021 the Average recovery rate increased and on the positions sold (from 29% to 32%), and on positions closed on an ordinary basis (from 45% to 47%).
The average recovery rate of bad debts backed by real guarantees was equal to 40%, increasing compared to 2021 (38%) due to the disposals, the recovery rate of which went from 34% to 38%.
For the positions not backed by real guarantees the average recovery rate was by 27%, an increase compared to the previous year (25%) both on the bad loans sold (from 22% to 24%) and on those subject to ordinary recovery procedures (from 35% to 42%).
Prices rising thanks to real guarantees
The price of the bad loans sold in 2022, obtained on the basis of the annual survey conducted starting from 2016 on a very large sample of operations, was equal to 21% of gross exposure of the budget at the time of the sale, slightly increasing compared to 20% in 2021.
The increase, as for the corresponding recovery rate, is attributable to both bad debts supported by real guaranteefor which the price is rose to 32% (29% in 2021), and to those not backed by collateral, the price of which increased to 12% (11% in 2021).
The price of sale of impaired loansthe different from the suffering was equal to 34%, down by 6 percentage points compared to the value observed in 2021, reflecting the lower weight of the guaranteed component.