Moody’s: Record Tourist Arrival Figures A Credit Positive For Banks

24/08/2017
The record-high tourist arrivals, which rose an annual 15 per cent over the past 7-month period edging 2 million is a credit positive for Cypriot lenders, Moody’s Investors Service said.

The increase in tourist arrivals this year, accompanied by a 22 per cent rise in revenue in January to May, helps Cypriot banks, plagued with a mountain of non-performing loans, improve their asset quality and find new lending opportunities, the rating company said in an emailed statement on Sunday, 20 August, Cyprus Mail reports. “Bank of Cyprus, for instance, disbursed €39m of new loans to hotels and restaurants in the first quarter of 2017, accounting for 8 per cent of new lending, and sold €1m of hotel property over the same quarter, generating net proceeds 17 per cent above book value”. The largest Cypriot lender’s real estate management unit is likely to find better opportunities to sell five foreclosed hotels worth €73m in the current industry environment, Moody’s said, adding that “the tourism industry’s revival is having positive ripple effects across the economy”. With tourism’s contribution to employment seen at around 7 per cent of the workforce and loans to companies of the hospitality sector accounting for 10 per cent of total credit, the improved performance of the tourism sector helped boost cashflows, reduce the unemployment rate to 10.8 per cent in June, and a second quarter growth rate of 3.5 per cent, the rating company said. Still, as the tourism sector is booming, non-performing loans in the accommodation and food services sector dropped 33 per cent to €1bn in March, compared to May 2014, accounting for 48 per cent of total exposures, Moody’s said.

 


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