2,373 loans subject to a moratorium on repayments as of end December 2020

At the end of December 2020, there were 2,373 loans subject to a moratorium on repayments, standing at €748.7 million, or 6.4% of total outstanding loans to Maltese residents.

The total value of loans subject to a moratorium in December edged down when compared with November, declining by around €185 million, according to the Central Bank of Malta’s latest Economic Update.

In response to the outbreak of COVID-19 and the subsequent containment measures, several businesses and households were faced with liquidity challenges, and thus applied with monetary financial institutions (MFIs) in Malta for a moratorium on loan repayments.

Loans subject to a moratorium declined for the fourth consecutive time since March 2020, suggesting that some businesses and households have recommenced regular loan repayments, signalling a recovery in income flows.

When compared with a month earlier, the largest declines in euro and volume terms were observed in the household, wholesale and retail as well as real estate sectors.

The largest number of loans covered by moratoria was held by households, with the sector accounting for 64.3% of the total volume of loans subject to a moratorium. Maltese households held €137.6 million, or 18.4%, of the total value of loans subject to a moratorium, equivalent to 2.2% of outstanding household loans.

Meanwhile, the accommodation and food services activities sector held €213.1 million in loans subject to a moratorium. This is the sector most affected by the containment measures and, in fact, 42.1% of the loans held by this sector were subject to a moratorium by the end of December.

The real estate sector held €188.9 million in loans subject to a moratorium, or around 25.2% of such loans – equivalent to slightly less than a fifth of the sector’s outstanding loans.

Moreover, as at end-December, the wholesale and retail trade sector held €31.0 million in loans subject to a moratorium, making up 4.1% of loans subject to a moratorium, or 4.7% of loans held by the sector.

To further alleviate liquidity challenges, the Government launched the Malta Development Bank (MDB) COVID-19 Guarantee Scheme (CGS) for the purpose of guaranteeing new loans granted by commercial banks for working capital purposes to businesses facing liquidity shortfalls as a result of the pandemic.

The scheme enables credit institutions to leverage government guarantees up to a total portfolio volume of €777.8 million.

By the end of December, 537 facilities were approved under the CGS, covering total sanctioned lending of €408.1 million.

As the scheme provides loans for working capital, only €287.1 million were disbursed by the end of December, up from the €252.7 million disbursed by the end of November.

Thus, by the end of 2020, slightly more than half of the scheme was sanctioned, while slightly more than a third was disbursed.

In terms of the number of facilities, the sector comprising wholesale and retail activities applied for the largest number of facilities and had the largest value of sanctioned loans at €95.1 million.

This was followed by accommodation and food services activities, with 122 facilities making up a total of €93.1 million in sanctioned loans, and the sector comprising transportation and ICT, which had a total sanctioned amount of €39.4 million.