MNI BRIEF: EA NPLs Fall, But Still Covid, Cyber Concerns: EBA

Euro area bank’s non-performing loan ratio has fallen 20bps to 2.1%, the European Banking Authority reported Monday, with household exposures falling from 2.7% to 2.5% compared with Q2 2021 and the ratio loans towards non-financial corporates dropping from 4.4% to 4.2% over the same period. Sectors accommodation and food service continue to have higher NPL levels but have also shown improvement, decreasing by 20bps to 9.5%, and for arts, entertainment, which fell 50bps to 7.7%.

Loans that have benefited from moratoria and public guarantee schemes continue to cause concern, especially given ongoing uncertainty caused by the Covid-19’s Omicron variant. However, bank’s profitability has stabilised at levels above those seen before the pandemic, with the majority of banks expecting operational risks to increase due mainly to elevated cyber risks.