Outlook ABI-cerved: in the 2019 the new companies' bad debts will return to pre-crisis levels

The rates of non-performing Italian companies will fall to 2,1% at the end of the next two years, very close to the 2008 levels. The improvement concerns all the economic sectors, the territorial areas and the business dimensions, with a more contained dynamic for the micro enterprises, the companies of the Center-South and those active in the constructions

Estimates for the 2017 and 2018-19 predictions in the Abi-Cerved Outlook updated to the current month

 

The situation of banks and businesses continues to improve on bad loans. In fact, over the next two years, the percentage of loans to companies that enter the state of non-performing during the year (bad entry rate), which are the origin of most of the non-performing loans accumulated by the banks, will continue to fall, until to settle on values ​​very close to pre-crisis levels. A positive trend that reinforces the clear trend reversal recorded in the 2017, when, for the first time since the beginning of the crisis, the number of bad loans accumulated by Italian banks fell sharply (-26% in net terms, after previous eight years had quadrupled), together with the rate of new bad debts, dropped from 3,8% of 2016 to 3,2%. The decline in new bad debts will continue to be more pronounced in the 2018, when it stands at 2,5%, and will suffer a slight slowdown in 2019, stopping at 2,1%, values ​​close to those recorded in 2008 (1,7%). An improvement that concerns all the economic sectors, the territorial areas and the size of the company considered, but more limited for micro-enterprises, the companies of the Center-South and those operating in the construction sector, which despite a significant slowdown in the degree of risk, remain in a condition of delay.

These are some of the estimates and forecasts contained in the Outlook on business non-performing by Cerved, the leading Italian operator in credit risk analysis, and ABI, the Italian Banking Association, updated in February 2018, which updates the 2016 data , estimates are provided for the 2017 and forecasts for the two-year 2018-19.

"Our estimates indicate that banks and non-financial companies are progressively disposing of the difficulties they accumulated in the worst years of the economic crisis and that the rate of new bad debts in 2019 will return to levels similar to those recorded before the recession - comments Marco Nespolo , CEO of Cerved -. The most interesting fact, and which gives us hope for the future, is that the decline in new bad loans, which we had already highlighted in 2016 for companies with more than ten employees, is now affecting all company sizes, economic sectors and areas of the country. A sign that the health of Italian companies is improving ”.

Giovanni Sabatini, ABI's General Manager, stated: "The data contained in the report illustrate the excellent results, higher than expected, that the Italian banking sector has been able to achieve in terms of reducing exposure to impaired loans. The forecasts for the next two years show a further recovery in the quality of credit, both as regards the stock and the flows of new bad debts. This suggests that the issue of managing the high amount of impaired loans inherited from the crisis is being accelerated and Italian banks can look back at the future with optimism, focusing on the growth of activities supporting the production sector ".

On the basis of the latest data available (December 2017), in the past year the stock of non-performing loans accumulated by Italian banks, which in five terms had increased fivefold between 2008 and 2016 (from 41 to 201 billion), has reached 167 billions in gross terms, down by 17% compared to the end of 2016, with a similar decrease in the business loans segment (-18%). The decline is even more encouraging if we take into account the net non-performing loans, which have gone from around 87 billion euros to the end of 2016 to 64 billion at the end of 2017 (-26%).

Sectoral trends - The Abi-Cerved Outlook highlighted a general decline in non-performing entry rates in all economic sectors in 2017, although strong differences still remain between the values ​​recorded in the various sectors. The industry saw an acceleration of the improvement that began in 2014, with the bad debt entry rate down to 2,4%, compared to 3% the previous year. The drop in rates was more marked among medium-sized enterprises (1,2%), which reached pre-crisis levels, and in small and large enterprises, which in the last year have greatly reduced the gap with pre-crisis levels. crisis (+0,1 percentage points compared to 2008), while the gap remains wider for micro companies (+0,7 percentage points).

After eight years of steady growth, in the 2017 the bad entry rates started to fall also in the construction sector, from 6,1% of 2016 to 5,2% of 2017, even if they still remain higher than those of other sectors and far from levels of the 2008. The most virtuous are the big companies (4,1%), followed by the small ones (5,5%), the averages (5,4%) and the micro companies (5,2%).

Even in the case of services, the long negative trend that lasted until the whole 2016 was reversed in the last twelve months. Bad debts were reduced from the 3,6% peak to 3%, with improvements on all the analyzed dimensional bands. The decline is more pronounced among micro-enterprises (from 3,9% to 3,2%) and between small companies (from 2,8% to 2,2%), but averages (from 2,3% to 1,8%) and large companies (from 1,8% to 1,3% ), continue to be the ones with the best performances.

Territorial trends - The general decline in non-performing entry rates affected the entire peninsula, with a tendency towards a reduction in the gap between the various Italian areas. The positive dynamics continued in the North-East, with a drop in rates from 2,7% to 2,2%, and in the North-West, which went from 3,2% to 2,5%. The reversal of the trend is evident in the Center-South, where new bad loans had grown throughout 2016, and where there was a reduction in rates of almost one point in the South and Islands (from 5,4% to 4,5 %) and over half a point in Central Italy (from 4,7% to 4,1%).

An analysis of company size reveals a gap in the soundness of the companies still very evident between Northern Italy and the South. Large companies in the South (with rates falling from 3,2% to 2,4%) are less risky than the companies in the Center (down from 3% to 2,5%), but remain far from the performance of companies in the North-East and North-West ( 0,9% and 0,8% against 1,3% of 2016). An obvious gap even if we look at medium-sized companies, where new bad loans to the Center (down from 3,5% to 2,9%) and to the South (from 4,2% to 3,5%) are much higher than those reported in the North-West (from '1,9% to 1,3%) and in the North-East (from 1,6% to 1,1%). Among the small companies, those in the South recorded the most marked reduction (from 4,8% to 4%), followed by the North-West companies (from 2,5% to 1,8%), the Center (from 4% to 3,4%) and from the North-East (from 2,1% to 1,6%). In micro-enterprises, however, the reduction in geographical differences is more evident, thanks to more pronounced improvements in the South (from 5,6% to 4,7%) and in Central Italy (from 4,9% 4,3%) compared to North-West (from 3,5% to 2,8%) and to the North-East (from 3% to 2,5%).

Forecasts for 2019 - Based on the forecasts of the Abi-Cerved Outlook, the decline in non-performing loans will continue throughout the next two years. The decline will be more pronounced among micro and small companies, with expected rates of 2,3% and 1,5% respectively, and more contained among medium-sized (1,1%) and large companies (0,9% ). In 2019, non-performing entry rates will return to close to pre-crisis levels in all size brackets, with the exception of micro-enterprises

By shifting the analysis on the sectors, in the industry the rates will drop below the pre-crisis levels, with the sole exception of micro businesses. In services, the gap with the 2008 levels will still be evident in small and micro companies (0,3-0,5 points). In construction, on the other hand, the flows of new bad debts will remain at fairly high levels (3,3%). The forecasts indicate marked and widespread improvements in all the geographical areas in the 2018 and in the 2019, but if in the North the pre-crisis levels are recovered, for the companies of the Center-South the new sufferings will remain above the values ​​of the 2008. The companies of the South (3,2%) will continue to be the most risky in the 2019, followed by those of the Center (2,8%), the North-West (1,6%) and the North-East (1,4%).

Outlook ABI-cerved: in the 2019 the new companies' bad debts will return to pre-crisis levels

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