Economy in Focus #6 - NPLs: A Decade-Long European Headache

In the 6th edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, delves into the decade-long challenge of non-performing loans (NPLs) across Europe. This report explores the impacts of NPLs on the European economy and the strategies for addressing them. Published in September 2023.

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A decade of NPL challenges

Since the financial crisis, European banks have grappled with non-performing loans, especially in southern Europe. Despite significant progress, NPLs remain a burden, with ongoing risks tied to recent economic conditions.

Stage-2 loans as a future indicator

Stage-2 loans, which have increased by 50% in the last four years, are seen as a warning sign of future NPL growth. Half of European companies expect these loans to rise over the next year, posing risks for banks and businesses.

Regional disparities in NPL impact

Southern European countries, particularly Greece and Italy, have been the most affected by NPLs. While significant reductions have been achieved, the risks of a new wave of NPLs remain as interest rates rise.

Anna Zabrodzka-Averianov, Senior Economist at Intrum

Comment from Intrum's Senior Economist:

"The European banking sector has made strides in reducing NPLs, but with rising interest rates and recent credit growth, we may face new challenges. Addressing these headwinds is critical to maintaining economic stability."

How will non-performing loans (NPLs) develop?

Download the Economy in Focus #6

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Previous editions of Economy in Focus:

Economy in Focus #5 – Four key challenges that European companies face

In the 5th edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, examines the four key challenges that European companies face, including revenue disruptions, inflation fears, wage-setting struggles, and cost-cutting measures. Published in June 2023.

Economy in Focus #4 – Employment remains strong in Europe

In the 4th edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, discusses Europe’s resilient labour market amidst economic challenges. The report highlights stable employment, falling real wages, and rising consumer confidence. Published in April 2023.

Economy in Focus #3 – Downturn on the housing market

In the 3rd edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, provides insights into the downturn in Europe’s housing market, with a particular focus on the impact of rising interest rates on household debt. Published in February 2023.

Economy in Focus #2 – Generation X worst off

In the 2nd edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, explores the record-low consumer confidence in Europe, the impact of rising inflation, and how Generation X is most affected. Published in December 2022.

Economy in Focus #1 – Inflation reaches highest level in decades

In the 1st edition of Economy in Focus, Intrum’s Senior Economist, Anna Zabrodzka-Averianov, discusses the record-high inflation levels across Europe, the sharp rise in energy prices, and the impact on consumer confidence. Published in September 2022.