Non-performing loans: defaults fell sharply

This year the default rate among companies has improved to 1.2 percent. The trend among individuals in the second half of 2020 also improved to 1.57 percent. However, the containment of credit risk eases as the end of the aid measures approaches.

The economic and financial situation of Italian companies is improving, as evidenced on the one hand by the numerous indicators on the trend of the economic situation and, on the other, by the contraction in default rates. This is what emerges from a study by CRIF, according to which behind the decrease in bankruptcies in our country there are above all the interventions launched by the Government and the moratoriums that have made it possible to ease the pressure on deadlines, in particular for joint-stock companies. Even if at this juncture of 2021 the effect of the credit support measures is attenuated (in June only a little less than a third of the moratoriums activated remain in place), the default rate of companies at the end of 2020 was below the threshold 3%.

The containment of credit risk is attenuated

The impact of the extraordinary interventions launched to deal with the Covid emergency was also significant on the NPE (Non-Performing Exposure) market and is also reflected in the fall in default rates on loans to households and businesses. This year, however, the effect on the containment of credit risk has begun to gradually diminish, so much so that, from the analysis on the expiry dates of the outstanding moratoriums, without considering the effects of the Sostegni Bis Decree and therefore the related potential extensions, there are only about 28% of the total measures activated (Banks and Consumer Credit). The forecasts are that in October the moratoriums still active will be less than 10% of the total perimeter of the initiative.

In 2020, default of 2.6% for companies and 1.61% for individuals

Concerning credit risk, according to the second edition of the NPE Observatory created by CRIBIS Credit Management (CRIF group), the contraction continued throughout 2020, assisted by support measures, promoted by trade associations and by legislative interventions such as finance facilitated and the blocking of dismissals as well as, in fact, the moratoriums. In detail, the analysis in the period between June and December 2020 shows a default rate for joint-stock companies which decreased to 2.6% from 3.14%, while for individuals it increased to 1.57% from 1.61%.

Trend improving also in 2021

The risk containment process also continued in the first four months of this year, with the default rate for retail credit (mortgages and consumer credit ) reaching 1.2%. However, this is a fact that could precede a turnaround. Despite the gradual consolidation of the economic recovery, Crif’s analysis takes into account a worsening in the coming months when the support measures will disappear, and then reach a peak in 2022.

Judicial procedures, the duration of foreclosures are extended

The NPE Observatory dedicates a chapter to securities procedures with a focus on third-party foreclosures from which, in the last 5 years, a progressive lengthening of the duration emerges, which go from an average of 6 months in 2015 to 11 months in 2020. The phenomenon, according to the interpretation, seems substantially determined by a progressive greater adoption of the instrument with the consequent flooding of the courts. Finally, the study points out that in 2020 alone about 65,000 real estate executions were closed compared to 38,000 open procedures. Also during last year, compared to 2019, there was a decrease in closed procedures equal to 25%, and the same percentage decrease was recorded for open procedures.