Scope Rating on Eu Banks
Heatmap Overview – Q2 2024
A moderate asset-quality deterioration is expected in the coming quarters, primarily due to weakness in the corporate sector. However, global economic recovery and a looser monetary policy stance may limit the negative impact on banks' credit profiles.
In Q2 2024, the consolidated non-performing loan (NPL) ratio for EU banks remained stable at 1.86%, despite a rise in total NPLs to EUR 373.4 billion. This stability reflects ongoing growth in loan volumes but raises concerns over future asset quality.
NPL Ratio Stability:
The overall NPL ratio held at 1.86%, balancing minor increases in countries like Germany, Finland, the Netherlands, and France with declines in southern Europe.
Significant NPL declines occurred in Greece and Poland, but these countries still have higher-than-average NPL ratios within the EU.
Sector-Specific NPL Trends:
Corporate Sector: NPLs grew in Germany and the Netherlands, while Spain saw improvement.
Sectoral Breakdown: The largest quarterly NPL increases occurred in *mining and quarrying* (3.7% to 4.2%) and *water supply* (1.4% to 1.9%). Real estate sector NPLs rose slightly from 2.6% to 2.7%.
Retail Sector: Spain showed improvements, but its household NPL ratio remains the highest in the EU/EEA at **3.74%**.
Geographical Variations:
Northern European countries, including **Germany** and **Finland**, saw modest NPL growth.
In contrast, **Greece** and **Poland** continued to improve significantly, albeit from higher starting points.
Cost of Risk
Small increases were recorded in Italy and the Netherlands. Germany, France, and Austria, however, continue to experience above-average risk costs.
A modest rise in NPLs is anticipated in upcoming quarters due to ongoing challenges in the corporate sector. However, the overall deterioration is expected to be limited, thanks to stabilizing economic factors and regulatory support across the EU.
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Relevant Links:
https://scoperatings.com/ratings-and-research/research/EN/177826
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