While aggregate delinquency data currently looks benign, asset quality is expected to deteriorate as support programmes come to an end.
Up to date aggregate delinquency data, while masking some divergence, holds no terrors, notes Scope Ratings. The NPL ratio for EU-headquartered banks fell to just 2.5% at the end of 1Q21, according to ECB numbers, while gross euro area NPLs more than halved between 4Q14 and 4Q20 from €998bn to €443bn thanks to effective offloading mechanisms and solid demand.
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