As of March 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.
Coverage ratio
The coverage ratio of NPLs in Italy has remained relatively stable during the past years. Nevertheless, that indicator 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.
Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country
Characteristic
Coverage ratio of NPLs
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The source added the following information; "Gross carrying amounts, other than trading exposures. Individual country data includes subsidiaries, which are excluded from EU aggregate. For example, at country level the subsidiary in country X of a bank domiciled in country Y is included both in data for countries X and Y (for the latter as part of the consolidated entity). In the EU aggregate, only the consolidated entity domiciled in country Y is considered. The sample of banks is unbalanced and reviewed annually."
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EBA. (July 13, 2023). Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country [Graph]. In Statista. Retrieved August 24, 2024, from https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/
EBA. "Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country." Chart. July 13, 2023. Statista. Accessed August 24, 2024. https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/
EBA. (2023). Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country. Statista. Statista Inc.. Accessed: August 24, 2024. https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/
EBA. "Coverage Ratio of Non-performing Loans and Advances (Npl) in Europe as of March 2023, by Country." Statista, Statista Inc., 13 Jul 2023, https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/
EBA, Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country Statista, https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/ (last visited August 24, 2024)
Coverage ratio of non-performing loans and advances (NPL) in Europe as of March 2023, by country [Graph], EBA, July 13, 2023. [Online]. Available: https://www.statista.com/statistics/894839/non-performing-bank-loans-coverage-ratio-in-europe/