Scandinavian Working Papers in Economics
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Bank of Finland Research Discussion Papers, Bank of Finland

No 10/1993:
Banks' Nonperforming Assets and Write-Offs in 1992

Johanna Pensala and Heikki Solttila

Abstract: In this paper we present data collected by the banking supervision authorities on banks' nonperforming assets and loan losses with a view to establishing a consistent database for analysing the condition of Finnish banks and firms. Over the past couple of years some FIM 100 billion's worth of banks' exposures have been nonperforming, for shorter or longer periods of time. At the end of 1992 banks' nonperforming assets amounted to FIM 55 billion, after writeoffs of FIM 22 billion for the year. Firms in the domestic sector of the economy are facing the most difficult debt-servicing problems; nonperforming assets amounted to some 15 per cent of exposures on average. For manufacturing firms, the figure was less than five per cent. The relatively stronger position of manufacturing firms is also clearly seen in the breakdown of loan losses by industry. These firms accounted for only just over 10 per cent of loan losses attributable to domestic firms. Construction and real estate business accounted for 45 per cent of the total. Although a fifth of nonperforrning loans were accounted for by households, these loans have not caused the banks' loan losses to any great extent so far. In 1992 they accounted for less than seven per cent of the total.

Keywords: nonperforming assets; loan losses; (follow links to similar papers)

23 pages, June 1, 1993

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