MONDAY, 08/07/2024 - Scope Ratings GmbH

EU banks: NPLs look set to continue rising

Despite expectations of a modest economic rebound in the euro area in the second half of 2024 aided by expected rate cuts and even more so in 2025, NPL formation will likely continue to rise moderately. We forecast euro-area GDP growth of 1.0% this year.

The European Banking Authority’s latest risk dashboard revealed a continued rise in non-performing loans among EU/EEA banks in the first quarter of 2024 to EUR 372.3bn. While the consolidated EU-level NPL ratio remains low at 1.86% (see Heatmap), the quarterly increase showed a significant acceleration, with EUR 7.6bn of additional NPLs, almost 3.5x the EUR 2.2bn increase registered in the last quarter of 2023.

Download the EU banks NPL Heatmaps report here.

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