February 26, 2014 / 10:52 AM / in 4 years

UPDATE 1-Greek banks' bad loans rose to 31 pct in Q3 2013 -banking source

ATHENS, Feb 26 (Reuters) - Non-performing loans held by Greek banks rose to about 31 percent of their total loan book at the end of the third quarter last year from 29.3 percent at the end of the first half, a banker told Reuters on Wednesday.

Non-performing loans are the focus of a health check the country’s central bank has run to assess whether top lenders are adequately capitalised to absorb further credit deterioration.

The European Central Bank will publish the results of its own health-check on banks in late October.

Greece’s top four lenders are expected to need about 5 billion euros ($6.9 billion) in extra capital based on figures given to them by the Bank of Greece. That figure is still subject to approval by the international lenders overseeing the country’s bailout.

Greece’s deep six-year recession and record unemployment of 28 percent have made it hard for many borrowers to continue servicing their loans, forcing banks to provision for bad debt.

Bad loans continue to increase but the pace of rise has started to slow. Athens expects its battered economy to pull out of recession this year and grow by 0.6 percent.

Loans are classified as non-performing when they fall past due for more than 90 days. Bad debt in bank loan books was 48.3 percent covered through accumulated provisions in the first half.

In consumer credit, non-performing loans rose to almost 46 percent of the total as of the end of last September from 43.8 percent at the end of the first half of the year, the banker said, declining to be named.

In the mortgage loan segment, non-performing loans increased to just shy of 26 percent from 24 percent in the first half.

The Bank of Greece, the country’s central bank, holds its annual shareholders meeting on Thursday and is expected to provide fresh data on the state of non-performing loans in its report. ($1 = 0.7282 euros) (Reporting by George Georgiopoulos; Editing by John Stonestreet and Hugh Lawson)

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