According to the Abi-Cerved Outlook, in 2021 loan deterioration rates will rise to 4% and, in the event of a second wave and another lockdown, to 4.6%. All the details
Covid effect also on the quality of credit granted to companies. The forecast comes from the Abi-Cerved Outlook, which prepares estimates and forecasts of the deterioration rates of loans granted to non-financial companies. According to the dossier prepared by Palazzo Altieri and by the company that analyzes credit risks, the deterioration rates of loans granted to Italian companies will tend to grow in the next two years, due to the pandemic, reaching a peak of 4% in 2021 for then resume descending in 2022.
It consoles the fact that, "despite the crisis, the physiological increase in risk, which will affect all size classes, remains much less than what was experienced in the past, both in the base scenario and in the pejorative scenario". The new impaired loans will therefore remain far from the peaks reached in 2012 (7.5%) and, even in the case of a new wave of infections in the autumn, the deterioration rate could reach 4.6%, also in this case keeping away from the highs of eight years ago.
PRE COVID TREND
According to what emerges from the Outlook, which examines data from the Bank of Italy, the banking system last year had "fully" overcome the emergency phase of impaired loans, which had reached its peak in 2015. Also in the first quarter of 2020 the same trend continued both thanks to the sale of NPL and the drop in new flows of impaired loans.
Therefore, in March last year the stock of gross impaired loans stood at 131 billion, -22.2% on an annual basis, compared to 360 billion at the end of 2015. A decrease also for gross bad loans, at 68 billion (-23 , 7%), and for other impaired loans to 63 billion (-20.4%) of which 59 billion are probable defaults (-21.8%) and 4 billion are past due exposures, the only ones to grow on a trend level ( + 6.4%). Net non-performing loans also decreased, to € 26 billion (-16.3%).
ANALYSIS BY SECTORS AND BY DIMENSIONAL CLASSES
As regards the various sectors, the trend at the end of last year showed a general decline in new defaulted loans with the strongest improvement in construction (from 4.7% to 4%), followed by services (from 3.2 % to 2.8%), from agriculture and industry (respectively from 3.2% to 3.1% and from 2.4% to 2.3% in 2019. In particular, the most significant gaps compared to the pre-crisis peak are it is recorded for small businesses (1.6% in 2019 against 2.6% in 2007) and for medium-sized ones (1.1% in 2019 compared to 1.9% in 2007) while in the construction sector the drop in deterioration has been marked in all size classes. Not so the services where the smallest companies benefited were the micro ones with rates of 3.1% (from 3.4% in 2018) and the small ones of 2 , 1% from 2.3% in 2018.
ANALYSIS BY GEOGRAPHICAL AREAS
Going for a ride inside Italy, in 2019 the deterioration rates of companies decreased in all areas with a more important decline in the Center (rates at 3.4% from 3.8% in 2018). This was followed by a drop of 0.3% in all other geographical areas, with the North-East at 2.1%, the North-West at 2.4% and the South which, despite the improvement, remains the largest area. risky. The values of 2019 are in all cases very distant from the pre-financial crisis levels, with a particularly high gap in the North-East (from 3.1% in 2007 to 2.1% in 2019) and in the South (from 4, 9% in 2007 to 4.1% in 2019).
FORECASTS FOR 2022
Abi and Cerved have also prepared forecasts for the trend of deterioration rates based on scenario assumptions that take into account the effects of Covid-19 on the Italian economic system. The impacts of the lockdown , the provisions of the various decrees of Palazzo Chigi and the evolution of international trade are taken into consideration.
Based on this scenario, in 2020 the Italian economy will undergo a sharp contraction in GDP (-8.2%), then rebounding in 2021 (+ 5.2%) and a further increase of 2.1% in 2022 In the two-year period 2021-2022 investments (+ 8.4% in 2021 and + 2.9% in 2022) and exports (+ 6.4% in 2021 and + 4.9% in 2022) will return to growth and gradually private consumption too (+ 5.2% in 2021 and + 2.1% in 2022). As regards the deterioration rates of non-financial corporations, a return to growth should be recorded in 2020 due to the economic crisis triggered by Covid-19 (3.8%). The maximum level is expected in 2021 (4%): then a drop to reach 3.3% in 2022.
According to Abi and Cerved, at the end of the forecast period, the deterioration rates of small businesses (2.1%) and large ones (1.3%) will return to pre-Covid levels, while those of micro and medium-sized businesses will remain at higher levels in 2019 but still lower than in 2007. Among the sectors, construction will be the most damaged by the shock generated by the pandemic with deterioration rates which after reaching 5.6% in the two-year period 2020-21 will drop to 5.3 %.
THE WORST SCENARIO
As mentioned, a worsening scenario is also considered in the Outlook, in which a slower recovery of the economy is assumed due to a second wave of contagions and another lockdown in the autumn. In this case, Abi and Cerved are forecasting a more marked decline in GDP for this year (-12%), with a rebound of 9.5% in 2021 and a growth of 2.6% in 2022. Stronger decline in consumption private individuals (-12.3%), gross fixed investments (-17.4%) and exports (-14.8%).
Deterioration rates would also worsen marginally: in particular, new defaulted loans would rise to 4.5% in 2020, to 4.6% in 2021 and then drop and close to 3.8% in 2022. especially small and medium-sized enterprises and, at sectoral level, services and industry. Finally, as regards geographic areas, rates would rise to 2.8% in the North-East regions, to 3.2% in the North-West, to 4.4% in the Center (+ 1%) and to 5.1% in the South (+ 0.9%).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/prestiti-banche-abi/ on Fri, 31 Jul 2020 05:23:56 +0000.