Bank loans for SME remain the most problematic in Europe

Non-performing loans (NPL) in Europe are rising in absolute value, but as a share of the total credit portfolio their growth is minimal, shows the latest EBA Risk Dashboard data, published by the European Banking Authority (EBA) as of the end of the third quarter of 2024. The report tracks asset quality and risks facing the banking sector in the EU and the European Economic Area.

As of September 2024 NPLs were 1.9% of the whole bank’s portfolio, unchanged from March and only 0.01 percentage points higher than September 2023.  Mortgage loans are the only ones where there is no increase in the share of non-performing loans. For a consecutive quarter, only 1.5% of them are overdue, which is the lowest value among all types of loans in the portfolios of European banks.

 

View EN_EBA_Risk Dashboard Q3_2024 on Beautiful.ai

 

Loans overdue for more than 90 days at the end of September were worth 376 billion. EUR, with 13 billion euro more than the same period of the previous year. Loans for small and medium-sized enterprises remain the most problematic, followed by the sector of commercial properties (see the chart). In general, households are doing better than businesses in paying loans, according to EBA statistics. Loans at risk of default (in Stage 2) remained unchanged on an annual basis – a share of 9.2%, after a very slight increase in March 2024.

According to the results of a recent EBA risk assessment survey, almost half of banks expect asset quality to deteriorate over the next 6 to 12 months, particularly in the consumer credit, SME and commercial property sectors. However, the share of pessimists is lower than previous studies.

By economic sector at the end of September the highest share of overdue loans was reported by accommodation and food services – 6.3%, but this is a 0.3 point drop for the quarter. If we exclude the sector of public administration, social services and defense, companies from the sector of gas, electricity and heat supply are with the least problems in credit recovery.

Read more news here