Banks agreed on ambitious but achievable targets, which were submitted at the end of September 2016, with a 3-year time horizon. According to these targets, banks will aim at reducing their NPLs by 49% by the end of 2019. The reduction is mainly driven by curing of loans and write-offs and to a lesser extent by liquidations, collections and sales of loans.
The largest part of the reduction will be effective in 2018 and 2019, since inflows of new NPEs will remain significant in the second half of 2016 and 2017. Banks managed to achieve the NPE targets for Q3 and Q4 2016, despite the headwinds in real GDP growth in the last quarter.