During downturns and periods of economic uncertainty, non-performing loans (NPL) are good indicators of how stressed are the financial institutions of a given country. The term NPL refers to loans whose repayment has been past due for a certain period. During the past decade, the
has been decreasing nearly every quarter. There are, however, important differences between regions, with countries in the south of Europe traditionally having a higher share of their loans past due. There are also differences between economic sectors.
In 2023, the
in the European Economic Area was higher than those to households.
Key indicators of non-performing loans
Sweden and other Nordic and Baltic countries had some of the lowest
NPL ratios in Europe in 2023, which means that the value of its non-performing loans only represented a small share of its overall loans. Meanwhile, Greece and Poland had some of the highest NPL values as well as
non-performing exposure (NPE) ratios in Europe, an indicator that also takes other assets, such as debt securities, into account. Nevertheless, even if there is a high risk of clients not paying that money back in those countries, that does not necessarily mean that their banks are in a tight spot as long as they set aside enough provisions for expected credit losses. Although the NPL ratio of both countries was similarly high in 2023, Poland had a much higher
coverage ratio of NPLs, which means that Polish banks will be more resilient during periods of economic crisis.
NPLs after the 2007 financial crisis
The impact of the financial crisis that started in 2007 was felt very differently across Europe. While the
NPL ratio of Germany, the UK, and the Netherlands remained well under five percent throughout the whole period, that value soared in Italy, reaching 18 percent in 2014 and 2015. Meanwhile, the
NPL ratio in Ireland was even higher, and in
Greece, it surpassed the 40 percent mark. Nevertheless, the value of
non-performing loans and advances in the EU has been decreasing since 2015 and the NPL ratios of most European countries have converged to some extent. As the current economic landscape remains uncertain, it is important for the banks in weaker positions to continue strengthening their finances so that they can face any potential losses.
This text provides general information. Statista assumes no
liability for the information given being complete or correct.
Due to varying update cycles, statistics can display more up-to-date
data than referenced in the text.
