NPL Study 2018

2017 saw a strong NPL sales activity in CEE region, after a record year in terms of non-performing loan portfolio disposals in 2016. The most active CEE markets with the highest volumes of portfolios sold in recent years were Romania, Hungary, Croatia as well as Slovenia. Although corporate NPLs are still the most actively traded loan portfolios, some investors have already turned their interest towards residential mortgages.

Read in our sixth edition of Deloitte NPL Study what are the main developments of the CEE and Romanian banking sector.

Key findings of the NPL Study 2018 report:

• The sale of non-performing assets is still the most common deleveraging option among banking industry players in the CEE region. As UK and Irish debt sales markets mature, the focus of investors turned towards the CEE and Mediterranean regions, giving an impetus to distressed asset transactions.
• Enhanced debt sales market activity continued in 2017, after a record year in 2016 with non-performing loan portfolio disposals picking up over EUR 7bn face value of completed deals in the CEE region.
• While activity in geographies where corporate NPL volumes are still relatively high is expected to rise in 2018, mature markets in terms of corporate NPLs are likely to shift towards mixed and retail mortgage debt sales.
• Secondary NPL trade activity is reviving and activity is expected to increase in the forthcoming years. The Romanian NPL market is expected to be the first to see secondary trade of NPL portfolios.
• Following the disposal of sizable corporate NPL portfolios, supply of new corporate NPL portfolios to be sold by banks has visibly decreased recently in many countries. Some investors turned their interest towards retail mortgages on the back of improving macroeconomic environment and residential real estate markets.
• Activity of NPL markets in CEE is likely to gradually subside in the forthcoming years and NPL markets of the Mediterranean countries are expected to emerge and attract more significant investor focus.
• Performing loan transactions and banking entity deals are likely to perk up on the back of the ongoing consolidation of the fragmented CEE banking markets.