Bad debts expected to decrease in 2003

The share of bad debts held by banks should decrease in the second half of 2003 as economic recovery improves the health of borrowers and boosts credit growth, the country's banking sector watchdog said yesterday. Wojciech Kwasniak, chief of the central bank's supervision inspectorate, said the average ratio had already dipped to 21.4% of total loans at the end of last year from a seven-year high of 21.7% in the third quarter. Surging bad debts, along with sluggish loan growth and shrinking deposits, were the main factor behind banks' poor results over the past two years. Sector analysts point out, however, that the Polish definition of irregular loans is broader than the generally accepted definition of debts overdue by more than 90 days, making international comparisons difficult. (Reuters) J.K.