Household debt makes up the largest portion of banks' non-performing exposures in the European Union — EUR 249.9bn out of a total EUR 634.9bn or nearly 40% — according to data from the EBA Transparency Exercise 2019.

Non-financial corporate debt (excluding SMEs) is the next largest borrower category of NPEs at EUR 183bn, followed by SME debt at EUR 180.5bn. All other categories combined total just EUR 21.bn, which includes NPEs to credit institutions, governments, and financial corporations.

Despite the lesser volume, the NPE ratio for SME debt remains the most problematic, standing at 8.5%, several percentage points above the unofficial EBA target ratio of 5%.

The corporate and household ratios fall under this threshold, at 4.1% and 3.1% respectively. The overall NPE ratio across the European Union is 2.7%. The NPL ratio stands at 3%, according to the same report.

Looking at individual countries, household debt makes up the largest portion in France, Spain, Greece and Ireland. Ireland, which is a very mature NPL market, is particularly weighted towards residential NPEs, which make up a full 60.4% of the remaining balance, EUR 5.7bn out of EUR 9.4bn total.

Italy and Portugal buck the trend though, with SME NPE volumes making up a larger portion. For Portugal, SME NPEs total 44%, or EUR 8.2bn out EUR 18.5bn.

Last year, EUR 7.6bn of NPLs and EUR 5.9bn of performing non-core loans sold were backed by residential real estate, according to the Debtwire NPL Database. The vast majority of REOs sold — EUR 8.2bn out of EUR 8.9bn — were residential.

Last year, Italian and Greek banks sold significant volumes of residential NPLs for the first time. Eurobank Ergasias’s EUR 2bn securitisation Pillar Finance and UniCredit Bank’s EUR 4.1bn GACS deal Prisma SPV were the largest to have residential real estate as collateral.

Amy Finch Data Journalist Debtwire

Amy is a data journalist for Debtwire. She covers the sale of NPLs and non-core loans, with a focus on Southern Europe NPLs as well as Irish/UK markets and unsecured loans.