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Benchmark Study on Non-performing Bank Loans, 2017

A record year in the NPL market

As a leading advisor in the CE market for non-performing loans, Deloitte has considerable expertise and experience in Central and Eastern European countries regarding NPL ratios and portfolios, as well as developments in the market of bad debt portfolios.

About the survey

In our white paper study covering Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Serbia, Slovakia and Slovenia, we are providing a high level overview on recent developments of local economies, evolution of key NPL metrics, as well as debt sales market dynamics. In addition, the 5th edition of the NPL study includes further analysis of forborne loan ratios and provision coverage ratios of NPLs.

Key findings

  • Sale of non-performing loan portfolios further increased in 2016 compared to 2014 and 2015 due to the increasing interest of NPL investors in the CEE region and the greater willingness of banks to dispose of portfolios.
  • Although investors turned their interest towards retail mortgages as well, servicing capacity is still a concern for many investors.
  • Based on our expectations for 2017, NPL transaction activity will level off or possibly further increase as NPL investors become more comfortable with the region.
  • The role of restructuring is likely to grow in the forthcoming years which will help further NPL reductions.
  • It should be noted though that NPL ratios in the region moving forward will be impacted by whether forborne loans can stay healthy on a long term basis or whether they enter default again.
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