But there is typically a lag between a contraction in economic activity and the formation of new NPLs. The policy support provided to borrowers through moratoria and public guarantees may imply that this lag will be longer than in past downturns, and NPLs may start to materialise in the course of next year.
Provision for loan losses to NPLs decreased to 188.8 percent from 121.0 percent over the same period, while NPLs to total loans increased to 5.5 percent from 2.4 percent. Market risk Institutions must put in place a market risk management framework that should outline the policy and process on measuring, monitoring, managing liquidity, interest rate, foreign exchange and equity as well as commodity risk.