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European Banks Continue Efforts to Reduce Non-Performing Loans

Published January 12, 2026, 05:12
European Banks Continue Efforts to Reduce Non-Performing Loans

Banks in Europe continue to work to reduce non-performing loans (NPLs), with varying degrees of success. Cyprus has made significant progress, reducing the NPL ratio to 0.9% in the third quarter of 2025, from 1.8% in June 2025 and 2.2% in September 2024, while in 2019 it was at 19.3%. The consolidated NPL ratio in the EU remains low and stable, however, NPLs of businesses remain elevated, particularly in Austria, France, and Germany. Analysts predict a moderate deterioration in asset quality due to rising geopolitical risks and economic uncertainties. Germany, France, and Belgium showed the largest quarterly increases, while Denmark, Italy, and Spain continued their downward trend. The NPL ratio of businesses remained stable. NPL ratios in the household sector remain generally stable, with small changes in most countries. However, Denmark saw a remarkable improvement, with an 11 basis point decrease in the quarter and a 31 basis point decrease in the last 12 months.

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