Loan loss provisions At the end of September 1999, the share of non-performing loans in total loans for the whole banking sector was 6% (bad or “lost” loans 1%). This indicator has considerably improved since the end of 1996.
In our opinion, these figures indicate realistic credit risk assessment and, in a transition economy, can scarcely be provided any lower that proper evaluation methods are used. Our loan-loss provisioning scheme is very tight (tighter than in western economies) and strictly enforced, so that non-performing loans do not pose any threat to the stability of the banking system.