EBRD: NPL Ratio in Eastern Europe Reaches Record Low
The average non-performing loan (NPL) ratio in Central, Eastern, and Southeastern Europe fell to a historic low in 2025, even though the total volume of problematic loans rose for the first time in several years. This reflects an increasing differentiation in credit risks across the region, as reported by the European Bank for Reconstruction and Development (EBRD) in its latest NPL Monitor.
NPL Ratio Falls Despite Higher Loan Volume
According to the EBRD, the average NPL ratio in the markets monitored by the bank fell to 1.86% at the end of 2025. This was because loan growth outpaced the number of new non-performing loans.
At the same time, the stock of non-performing loans increased by 4.5% year-over-year to 28.6 billion euros. This brought an end to the multi-year decline in non-performing loans. According to the EBRD, this points to a “more uneven evolution of credit risks” in the region.
“NPL ratios in the markets covered by the European Bank for Reconstruction and Development remain near historic lows. This reflects the resilience of the banking systems despite a challenging economic environment,” the bank stated in its report.
At the same time, the EBRD points to growing disparities between individual countries and economic sectors. Credit risks are no longer evenly distributed but are increasingly concentrated in specific markets and industries.
Differences Between Countries Are Increasing
According to the report, Hungary, Romania, and Slovenia saw a significant increase in the volume of non-performing loans in 2025. In other countries, however, asset quality in the banking sector continued to improve.
In the EU countries of Central and Eastern Europe, the share of Stage 2 loans—that is, loans with a significantly increased risk of default but not yet in actual default—fell to 8.5% by the end of 2025. In the previous year, this share had stood at 10.4%.
By contrast, the share of Stage 3 loans—which are considered actually nonperforming—remained largely stable at around 2%.
Construction and Real Estate Remain High-Risk Sectors
The EBRD emphasized that commercial real estate and the construction industry remain among the sectors most at risk. According to the report, the construction industry has the highest NPL ratio in the region.
Small and medium-sized enterprises, particularly export-oriented firms, also remain under pressure due to geopolitical tensions and uncertain trade conditions. The trend in consumer lending must also continue to be closely monitored.
Banks’ risk provisions have weakened slightly. The regional coverage ratio for non-performing loans fell to 62.7% by the end of 2024.
Market for Non-Performing Loans Is Changing
According to the EBRD, the market for trading in non-performing loans is also undergoing change.
While large portfolio transactions had dominated the market in recent years, smaller and more targeted deals—so-called forward-flow agreements—as well as sales on the secondary market are now gaining increasing importance.
Credit Risks Persist
Despite the positive trend in NPL ratios, the EBRD warns that the risk of another rise in non-performing loans remains.
Ongoing geopolitical conflicts, the increasing fragmentation of global trade, and weaker growth prospects could continue to weigh on many small and open economies in the region.
The Bank therefore emphasizes the importance of early detection of credit problems, as well as the rapid restructuring and disposal of non-performing assets.
The EBRD’s NPL Monitor covers 17 countries in Central, Eastern, and Southeastern Europe and is published as part of the Vienna Initiative. The forum was established during the 2009 financial crisis to support the stability of financial systems in emerging European markets.