Non-performing loans coverage ratio in Europe December 2023, by country

As of December 2023, the Romanian banking sector displayed the highest coverage ratio of non-performing loans and advances (NPL) among European countries. The non-performing loan coverage ratio looks at a banks ability to absorb future losses. Banks understand not every loan that they lend will be paid in full, so by predicting the rate of non-performing loans, banks can be prepared to cover these future losses. The higher the coverage ratio, the better prepared a countries banks are for such an outcome. 

How have evolved NPLs in different European countries?

In some countries such as the United Kingdom, approximately one percent of loans were non-performing (NPL), whereas less economically stable countries such as Greece have seen NPL’s reach worryingly high levels. Nevertheless, the southern-European country has reduced the size of its NPLs quite fast during the past years.

Italy's coverage ratio ramains stable

The coverage ratio of NPLs in Italy has remained relatively stable during the past years. That stability was reached after the coverage ratio grew at a fast pace between 2015 and 2018. Although Lithuania was, as seen in this statistic, one of the European countries with the lowest coverage ratio of NPLs, when focusing on the EU mortgage market, the Netherlands was the country with less provisions for credit losses as a share of non-performing loans.