(AGENPARL) – mar 06 dicembre 2022 PUBLIC
New NPL Monitor: NPLs decline but concerns sparked by inflation, war on Ukraine weigh on asset quality
Read full report[NPL Initiative | Safeguarding the financial stability of emerging Europe (vienna-initiative.com)](https://npl.vienna-initiative.com/npl-monitors/)
EBRD press release
NPLs decline to record low in emerging Europe
Concerns sparked by inflation, war on Ukraine weigh on asset quality
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Date:06/12/2022
Contact:Svitlana Pyrkalo
@EBRD
·Non-performing loans hit new record low in CESEE since global financial crisis
·New Report warns of growing concerns on a potential increase in NPLs
·Report also lists support measures by governments, EU and IFIs
Non-performing loan (NPL) stocks have hit their lowest levels since the global financial crisis of 2008-2009 in central and south-eastern Europe, according to the [latest NPL Monitor published today.](https://npl.vienna-initiative.com/npl-monitors/)
“Bad loans” fell across the region to 2.6 per cent since the last NPL Monitor publication six months ago, and by 6.9 per cent in the 12 months leading up to 30 June 2022, to €32.2 billion, their lowest level in recent years. However, both the war on Ukraine and inflation will continue to put pressures on the asset quality.
In relative terms, the decline in NPL stocks was most significant in Estonia, Latvia and Lithuania. The largest contributor in absolute terms was Poland, where “bad loans” declined by almost €1.24 billion. The NPL ratio decreased in all countries that are covered in the report with the exception of Montenegro, where the ratio increased by 0.6 percentage points. The decreasing trend also continued in Greece, Cyprus and Ukraine. In Ukraine, NPLs declined by nearly 9 per cent in the year to June 2022, although it is expected that asset deterioration may show up in later assessments.
The report also warns that a 0.9 percentage points increase in “stage 2 loans”, i.e. assets which may later deteriorate into non-performing loans, have been reported in the EU CEE[1](#_ftn1) countries. This raises further concerns that NPLs may increase in the near future as most Covid-19-related support measures have been phased out, with borrowers now also being stressed by surging inflation and sharply rising interest rates.
Meanwhile, the region’s financial institutions are preparing for future risks by increasing provisioning levels. The average NPL coverage ratio increased by 1.8 percentage points during the period.
The half-yearly report tracking non-performing loans has been prepared by EBRD as part of the Vienna Initiative framework. NPL Monitor is [published on the Vienna Initiative website](https://vienna-initiative.com/), alongside two other reports prepared by international financial institutions: the Deleveraging and Credit Monitor by the IMF and the Bank Lending Survey by the EIB, which are also being issued today.
Overview of the NPL profile in the CESEE region, 30 June 2021 to 30 June 2022
The new report also includes a summary of recent decisions by Vienna Initiative stakeholders and EU regulators to support economies of central, eastern and south-eastern Europe, including loans, grants and targeted support schemes.
The NPL Monitor is a half-yearly report produced as part of NPL Initiative, a subset of the broader Vienna Initiative. The Vienna Initiative framework was established during the global financial crisis safeguarding the financial stability of emerging Europe, bringing together banks, governments, regulators and international financial institutions.
OFFICIAL USE
To learn more about EBRD classifications, visit http://www.ebrd.com/ic
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PUBLIC
To learn more about EBRD classifications, visit http://www.ebrd.com/ic
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[1](#_ftnref1) EU-CEE: Bulgaria, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Romania, Slovak Republic and Slovenia.
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