IFIS NPL Market Watch
Closing 2023 and Forecast 2024-2025
Compared to the September 2023 forecast, it has beeen estimated that Italy's bank loan deterioration rate decreased in 2023, thanks to the resilience of credit quality. At the EU level, there is also no stress on impaired loans: significant banks show a stable Npe ratio around 1.8 percent
The 2023-2025 credit deterioration rate is expected to remain at a historically low level when compared to the values of the sub-prime mortgage and sovereign debt crises. The 2024 and 2025 forecast is slightly higher than September 2023 estimate (Market Watch Npl) due to lower expected domestic output growth (in 2024 +0.6% vs +0.93% in September 2023 consensus).
GBV of Npe portfolios transacted in 2023 was €30 bn. Npl volumes (23 bn€) saw a significant weight of the secondary market (68%)
The 2024-2025 forecast sees an incidence of more than 50% of the secondary market and, at the same time, a primary market supported by the goal of containing the banking system's Npe ratio around 3%, as shown by the analysis of the business plans of the main Italian banking groups, which show targets between 0% and 4.4%
The Analysis of the 34 DBRS-rated portfolios for which time comparison is available showed that as of mid-2023, performance toward targets was unchanged from 12 months earlier (102.7% vs. 102.4%), thanks to the performance of the most recently securitized portfolios that appear to have been unaffected by rates and inflation
In 2022 and 2023, the impaired loan segment saw 23 extraordinary transactions, resulting in 16 acquisitions and 7 JVs and start-ups of new servicers.
Relevant Links:
https://www.bancaifis.it/app/uploads/2024/03/MW_NPL_Feb24_EN_MASTER-20240206.pdf
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