NPL Chart of the Week: 09 December 2019
NPL volumes in European countries continued to decrease between June 2018 and June 2019, according to the latest data from the EBA EU-wide transparency exercise. At 3%, the NPL ratio across the EU is the lowest since the standardisation of the NPL definition in 2014.
The total NPE volume across the European Union was EUR 635bn as of end 1H19, compared to EUR 749.2bn a year previously. The rate of decrease, though, has declined. Between June 2018 and June 2019, the total NPL volume fell by EUR 111.2bn. In the year to end-June 2018, the decrease was EUR 146.8bn, from a total EUR 893bn at end-June 2017.
Since 2014, NPLs have near halved from EUR 1.2trn, according to the EBA’s accompanying Risk Assessment. Every country recorded a reduced NPL ratio apart from Estonia, Finland and Luxembourg, which had small increases but remained well below the unofficial 5% target.
Cyprus topped the charts in terms of NPL ratio reduction, with a close to 13 percentage point decrease during 2018/2019. Bank of Cyprus’s EUR 2.8bn Project Helix was the biggest portfolio traded in this period, sold to Apollo in summer 2018, according to the Debtwire NPL Database.
Italy had the biggest absolute decrease at EUR 40.7bn, to EUR 137.2bn as of June this year.
Last year, record-breaking volumes were traded in Italy — EUR 103.7bn in 67 deals. The market has remained the largest by volume in 2019 but has not come close to the previous total, with EUR 29.7bn sold in 34 deals.
Italy and France still have the highest NPL volumes in Europe, EUR 137.2bn and EUR 122.6bn, respectively. They are followed by Spain and Greece, which have EUR 84.bn and 79.2bn of NPLs on bank balance sheets.