The average ratio of ‘gross non-performing loans’ (NPL) in the European Union continues to decline toward its pre-crisis level, the European Commission noted in a fourth progress report published on Wednesday 12 June.
At the end of the third quarter of 2018, this average ratio reached 3.3%, down 1.1% compared to the third quarter of 2017. Since 2014, it has decreased by more than half.
However, wide national disparities remain, with countries most affected by the financial crisis still reporting high national ratios. This is the case for Greece (43.5% compared to 46.7% in the third quarter of 2017), Cyprus (21.8% compared to 32.1%) and Portugal (11.3% compared to 14.6%). In contrast, the States in which the NPL ratio was lowest at the end of September 2018 are Luxembourg (0.9%), Finland (1.1%), Sweden and the United Kingdom (1.2%). In Germany and France, the national ratio was 1.6% and 2.8% respectively.
Presenting these good results regarding the reduction of financial risks in the banking sector, the European Commissioner for the Euro, Valdis Dombrovskis, nevertheless expressed regret that the continued decline in the stock of NPLs in the EU has not allowed progress to be made in completing the banking union through the introduction of a European Deposit Insurance Scheme (EDIS).
In the previous legislature, EU lawmakers adopted a regulation on the minimum coverage of inherent losses from the future stock of NPLs (see EUROPE 11162/1), but it could not do the same for a proposed directive to stimulate secondary markets for non-performing loans (see EUROPE 12236/22).
See the Commission's report: http://bit.ly/2XIHjng (Original version in French by Mathieu Bion)