The 12th NPL Meeting organised by Banca IFIS was held on 27 September in Cernobbio. The most relevant point of the day concerned a positive fact for Italy: despite an overall increase in NPEs at European level, our country continues to stand out thanks to effective risk management and innovative recovery strategies. In this perspective, the impaired credit market remains central to the stability and sustainability of the Italian and European banking system.
During the first half of 2024, the total Non Performing Exposures (NPEs) of major European banks increased by EUR 16 billion to EUR 373 billion. In particular, banks in Germany and France recorded the largest increases, with EUR +9.4 billion and EUR +8.8 billion, respectively. However, in sharp contrast, Italy further improved its position, reducing its NPE stock by EUR 5.1 billion over the same period.
In the European context, the increase in NPEs also led to an increase in the NPE ratio from 1.75% in March 2023 to 1.86% in June 2024. This increase was due to global economic factors, including economic uncertainty and inflationary pressures, which led to an increase in the cost of risk for significant banks in the EU. In the first quarter of 2024, the cost of risk reached 0.57%, the highest level since the end of 2020, decreasing slightly to 0.51% in the second quarter.
In contrast to the European trend, Italy showed positive results, with a decrease in the stock of NPEs and an improvement in the Stage 2 ratio, which fell from 11.5% at the end of 2023 to 9.4% in June 2024, aligning with the EU average for the first time. This improvement reflects the effective derisking strategies undertaken by Italian banks and the support of public policies in favour of businesses. By the end of 2024, the total stock of NPEs in Italy is expected to decrease further to EUR 290 billion, with further reductions estimated until 2026, when it is expected to reach EUR 277 billion. Since 2015, the Italian banking system has reduced the stock of NPEs by approximately EUR 71 billion, thanks in part to collaboration between banks and operators specialising in impaired loans.
Despite the decline in transacted NPE volumes (estimated at EUR 24bn by 2024), the market remains buoyant. For the two-year period 2025-2026, about EUR 18 billion of NPLs per year are expected to be transacted, and about EUR 5 billion of UtP, allowing banks to keep the NPE ratio around the 3% threshold. The improved health of the Italian banking system, compared to other European countries, is also evident in credit recovery performance, with an average lengthening of the recovery curve of about 8 months compared to original forecasts. The 2024 edition of the NPL Meeting, entitled ‘Step Forward’, highlighted the key role of the impaired credit industry in improving the efficiency of the Italian banking system. During the event, Mr. Ernesto Fürstenberg Fassio, Chairman of Banca Ifis, emphasised the importance of a sustainable and social approach in credit recovery, which favours the financial re-inclusion of debtors.
According to Frederik Geertman, CEO of Banca Ifis, Italy’s success in reducing NPEs is an example of how the industry can adapt to economic and regulatory changes. Even as new NPE flows decrease, optimisation of existing portfolios and a vibrant secondary market keep the banking system stable and competitive.
