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Economy in Focus #6 - NPLs: A decade-long European headache

In this edition, published September 2023, we take a closer look at the economic phenomenon of NPLs – non performing loans – how they function and what the future development might look like.

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In 2015, the NPL stock peaked at nearly EUR 1.2 trillion, corresponding to about 6 percent of the total European loan stock. Today, the total NPL stock in Europe amounts to an estimated EUR 357 billion, corresponding to 1.8 percent of the entire European loan stock.

What does the future hold for NPLs?

Watch the 3 minute video summarising the highlights of the report:

In this issue:

Intracontinental economic differences between the North and South of Europe
Europe’s big economies
A future wave of NPLs?

The European banks find themselves in a stronger position compared to 15-20 years ago. But they are far from being immune to a new wave of potential NPLs. The full effects of the sharp interest rate hikes are yet to unfold.

Anna Zabrodzka-Averianov, Senior Economist at Intrum

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Read more about NPLs

Non-performing loans – reducing the burden

Since European non-performing loans peaked at EUR 1.2 trillion in 2015, banks and regulators have worked hard to reduce the burden. However, the pandemic led to a rise in lending and a need to redouble efforts.

Non-performing loans – the legacy of crisis

The build-up of non-performing loans caused by the 2008 financial crisis led European NPL stock to peak at EUR 1.2 trillion in 2015. Banks have been dealing with the headache ever since. But what are non-performing loans and how are they categorised?

Non-performing loans – the intracontinental differences

Economic differences across Europe are reflected in non-performing loan volumes, with southern Europe harder hit than the north. However, banks may still be vulnerable to new waves of NPLs