NPLs in the euro area fell to six-years low

Another decline in the level of non-performing loans (NPLs) noted the European Central Bank (ECB). The statistical data covered financial institutions in the euro area and banks, which are directly controlled by the ECB. According to data, at the end of June 2021, only 2.32% of loans and advances were overdue, compared with 2.54% at the end of March. This is the lowest level recorded since supervisory banking statistics were first published in the second quarter of 2015.

The declining is both to an decrease of the value in NPLs portfolios and an overall increase in the credit portfolio, said the ECB. In absolute terms, overdue loans decreased by EUR 33 million to EUR 422 billion.

In the separate countries the share of NPLs varies widely – less than 1% in Luxemburg to almost 15% in Greece. Cyprus and Portugal are also well above average level, while Germany, Lithuania, Estonia, are below them (see the chart).

In the second quarter of this year the whole credits and advances, related with the COVID-19 measures, have decreased to EUR 548 bln. This is 11.% decline compared to the first quarter of the year. The decrease is due to loans with unexpected moratorium, which now are more than EUR 100 bln, almost a double decline compared to March 2021. The statistic shows a minimal change in the new loans, granted by the governments for support in COVID-crisis. 

Overall, the ECB says the financial condition of the banks is good, given their results and performance. Return of equity declined slightly, operating revenues are also declining – with EUR 5 bln to EUR 123 bln. Nevertheless, the overall levels of return of capital of the significant financial institutions in Europe remain above the 2020 levels, noted the ECB. 

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