Information on PDNI
over 90 days for Q1 2018 provided by management confirms that LLR coverage has been restored to more than full.
The total problem loans ratio (impaired (including interest in suspense), restructured and more than 90 days PDNI
) accounted for about 13% of gross loans at end-2017.
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Although management recently informed CI that NPLs are expected to decline noticeably in the near term thanks to accelerated write offs and off-balance sheet transfers, further growth is not to be ruled out given the significant increase in PDNI
Effective remedial measures have limited the migration of 'past due not impaired loans' (PDNI
) less than 90 days to the NPL category.
There may, therefore, be a further increase in NPLs over the near term, despite the significant reduction seen in the Bank's past due not impaired (PDNI
) loans less than 90 days.
Although the fall in 'watch list loans' may evidence diminished credit stress, the increase in 'past due not impaired loans' (PDNI
, less than 90 days) suggests there is ongoing pressure in AAIB's credit portfolio.
NBE's still significant proportion of past due not impaired (PDNI
) loans less than 90 days overdue signifies ongoing high credit stress and a rather high probability of renewed non-performing loan (NPL) accretion over the near to medium term.
The operating environment further impacted the Bank, as asset quality suffered from a large increase in 90+days past due not impaired (PDNI
At the same time, LLR coverage together with broader asset quality measures such as Past Due Not Impaired Loans less than 90 days overdue (PDNI
While there were significant PDNI
balances as at end-June, the amount past due for more than 60 days was low, indicating the probability of a low rate of non-performing loan (NPL) accretion in H2 and a consequent lower level of specific provisioning.