retail banking sector, a prerequisite for competitive and effective banking services. broadly, the recovery in the sector is continuing as banks continue to repair their balance sheets. the sustainability of bank business models, however, remains the main strategic risk for some institutions and a focus of supervisory work. balance sheets continued to decline during the first half of 2017 and cost challenges remain a significant concern for bank operating models. yields on the bonds issued by irish banks have declined but remain at elevated levels compared with eu peers. at end - june 2017, the non - performing loans ( npls ) of irish retail banks stood at €35. 8 billion, equivalent to an npl ratio of 16. 1 percent. npls, however, have declined for fourteen consecutive quarters, representing a 58 percent reduction from the q4 2013 peak, or a decrease of €50 billion in gross exposures. looking ahead, more npl reductions are expected through further restructuring, recoveries, and loan portfolio disposals. from a policy perspective, the recently published ssm public consultation for the minimum level of prudential provisions for npls is an example of the european - wide action in this critical area. put simply, where new npls arise in the future, banks will have to provision fully for them over a set period, subject to a comply - or - explain mechanism. npls cause considerable distress for borrowers but also require strategies from banks to manage these with their borrowers. our focus remains the execution of an effective and sustainable npl reduction strategy for each bank that ensures fair treatment of consumers and sme borrowers. the code of conduct for mortgage arrears ( ccma ) sets out how lenders must treat borrowers in ( or facing ) mortgage arrears, with the objective at all times of providing sustainable solutions that assist the borrower to meet mortgage obligations. the number of mortgage accounts for principal dwelling houses ( pdh ) in arrears fell further in the second quarter of 2017, the sixteenth consecutive quarter of decline. the number of pdh mortgage accounts classified as restructured at end - june was 120, 398. of these restructured accounts, 87 per cent were deemed to be meeting the terms of their current restructure arrangement. similarly, regulations on sme lending have been strengthened to provide greater protections to firms in financial difficulties. concerns have arisen about sales of loans to international funds and non - banking entities. it is important to recognise that the ccma applies to the

long - standing focus on resolving mortgage arrears, outline our expectations of lenders6 to continue to strive to resolve distressed debt in a fair and effective way. i will highlight : https : / / www. centralbank. ie / news / article / speech - the - need - for - continued - focus - on - resolving - long - term - mortgage - arrears - ed - sibley - 13 - july - 2021 1 / 9 7 / 14 / 2021 a long shadow – the need for continued focus on resolving long term mortgage arrears - deputy governor ed sibley the effectiveness of lenders ’ support of borrowers affected by the pandemic, initially through payment breaks and then through more tailored engagement ; and that lenders appear to be well - prepared for any emerging distress as government support measures taper ; that considerable distress remains within the mortgage market, with more than one in eight private dwelling home ( pdh ) mortgage accounts exhibiting some level of distress, 7 primarily pre - dating the covid - 19 pandemic ; that lenders can and need to do more to resolve long - term mortgage arrears ( ltma ) and i will outline the central bank ’ s expectations in this regard ; and that full resolution of long - term mortgage arrears cannot be delivered solely within the financial system. pandemic related borrower support while we are hopefully coming towards the end of the worst effects of the pandemic in ireland, it remains a profound shock. it has challenged our resilience in many ways and has had a devastating effect on many families and individuals. the health emergency has also had a profoundly negative effect on many businesses and household incomes, due to the associated economic disruption. 8 the economic challenges posed by covid - 19 have been met by exceptional policy support. this has included a range of fiscal, monetary, macro - prudential and micro - prudential policy actions, and actions taken by financial services firms to support households, businesses and vulnerable borrowers. i want to acknowledge the work of all of you who played a part in providing this support to affected borrowers. in aggregate, lenders granted payment breaks to over 172, 000 accounts representing over €23 billion of irish lending. this combination of supports has been crucial in minimising the economic effects of the emergency on households and businesses. these policy responses have ensured that “ initial fears about widespread credit risk events in the immediate aftermath of covid - 19 did not