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Add to Preferred SourcesNon-performing loan (NPL) levels across central, eastern and south-eastern Europe (CESEE) remain near all-time lows, reflecting the resilience of banking sectors amid a challenging economic environment, according to a press release by the European Bank for Reconstruction and Development (EBRD). The latest edition of the EBRD’s NPL Monitor, published on 07 Jul 2026, shows the average regional NPL ratio falling to a historic low of 1.86 per cent. However, NPL volumes rose for the first time in recent years, signaling more uneven credit risk dynamics. Commercial real estate, construction and SME portfolios remain key areas of supervisory focus. The findings suggest credit risks are becoming increasingly divergent across countries and sectors.
The NPL Monitor is a semi-annual publication under the Vienna Initiative’s NPL Initiative. It is released on the Vienna Initiative’s website as part of ongoing work to monitor asset quality trends and support financial sector resilience across the region. The Vienna Initiative was established in 2009 during the global financial crisis. Its aim was to safeguard the financial stability of emerging Europe. It brings together banks, governments, regulators and international financial institutions.
In the CESEE region, the stock of NPLs reversed the declining trend of recent years, rising 4.5 per cent to €28.6 billion in the year to December 2025. Despite this, the average regional NPL ratio dropped to a new low of 1.86 per cent, as loan growth outpaced the rise in impaired exposures. The overall coverage ratio edged down to 62.7 per cent, a fall of 1.5 percentage points from the end of 2024. Hungary, Romania and Slovenia recorded notable increases in NPL volumes, while several other markets continued to see improvements in asset quality. In EU countries within the central and eastern Europe region, the share of Stage 2 exposures declined sharply to 8.5 per cent by the end of 2025 from 10.4 per cent a year earlier.
Sectoral risks remain concentrated in specific areas. Commercial real estate (CRE) continues to show signs of stress, while the construction sector records the highest NPL ratio. Small and medium-sized enterprises (SMEs), particularly those in export-oriented industries, remain vulnerable to geopolitical tensions and trade-related uncertainty. The NPL transaction market is also evolving, with the broad-based deleveraging of previous years giving way to a more selective environment, including smaller targeted transactions, forward-flow arrangements and secondary market trades. From 2026, the European Central Bank (ECB) will introduce changes to its NPE framework, including multi-year coverage expectations for significant institutions and a more harmonised approach to legacy NPEs among less significant institutions.
Although the NPL Monitor regions — comprising 17 CESEE countries and selected non-CESEE markets — have so far avoided a significant deterioration in asset quality, the report warns that the risk of renewed NPL accumulation remains. Ongoing geopolitical tensions, global trade fragmentation and weaker growth prospects continue to weigh on many of the CESEE region’s small and open economies. Supervisors are also paying increasing attention to the growing private credit market and links between banks and non-bank financial intermediaries. In this environment, early identification of credit stress, targeted supervision and timely resolution of distressed assets will remain essential. Stage 3 loans meanwhile remained broadly stable at around 2.0 per cent.