The aggregate non-performing loan (NPL) ratio of EU banks was stable at 1.88% in the fourth quarter of 2024, but there has been a divergence in asset-quality trends between core and peripheral countries. The largest quarter-on quarter increases in NPL ratios to Q4 2024 were in Austria, Germany and the Netherlands. Austria’s NPL ratio of 2.4% is higher than in Italy (2.31%) where the ratio remains on a declining path.

By contrast, NPL ratios in Spain, Portugal, Ireland and Greece also continued to decline. Greece’s NPL ratio stands at 2.9%, still higher than but rapidly converging to the EU average.

The deterioration in Austria was entirely driven by the corporate sector, which saw its NPL ratio jump by 53bp in Q4. Corporate NPLs ratios also rose in Denmark and Germany, although at EU level, corporate ratios show a marginal improvement. Corporate loan quality continues to recover in France, Spain and Italy.

At the sectoral level, some deterioration is visible in real estate and manufacturing, which together account for the largest share of the aggregate EU corporate loan portfolio at roughly 40% for banks in the EBA sample. Asset quality in real estate within the corporate loan book deteriorated slightly in Q4, with an aggregate NPL ratio of 2.8% in Q4 2024. The gradual deterioration was visible in Austria, Germany and France.

The household segment is still performing well, although it showed some deterioration in the Netherlands in Q4, albeit still at a healthy 1.2% NPL ratio. Household NPL ratios in in Austria, Italy and Spain are declining.

Download the latest quarterly EU NPL Heatmap report here