European NPL Market Update H1 2021

Levels of non-performing loans (NPLs) are set to rise as the aftereffects of the pandemic exert pressure on the performance of the European banking sector.

July 26, 2021

Our inaugural European NPL Market Update report draws on the latest data from the European Banking Authority (EBA) and predicts an uneven recovery across the European market, with pockets of stress anticipated to emerge from 2022 onwards.

Current data suggests that NPL volumes are set to rise over the coming quarters, though it’s unlikely to surge in the near term. As a result of lender forbearance (forborne loans increased by 7.6% in Q1 2021) and government-backed pandemic loan schemes, according to the EBA, the NPL ratio fell by 10bps to a decade low of 2.5% in Q1 2021. While NPL ratios remained stable for non-financial corporates (NFCs) and household exposures, the biggest increase was among accommodation and food services (up QoQ from 8.4% to 9.0%) as well as arts, entertainment and recreation (up QoQ from 7.2% to 7.9%).

The report will also include country profiles outlining market conditions in the United Kingdom, Ireland, Germany, France, Greece, Spain, Italy, Portugal and Poland.

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