European comparison: clearest increase lazy loans at German banks

Germany’s banks have to deal with the highest increase in lazy loans in a European comparison. Almost a quarter (24.9 percent) more default-prone loans (“Non-Performing Loans”/Npl) than a year earlier were in the balance sheets for 2024, as an analysis by the consulting company BearingPoint showed. On the average of the 163 monetary houses examined in Europe, the NPL increase was 1.1 percent.

The main causes for the leaking increase in Germany are “the sharp increased number of corporate insolvencies as well as the massive losses of value and increasing credit losses in the commercial real estate sector,” said Bearingpoint.

Corona retrospective effects drive into the bankruptcy

Last year in Germany with 21,812 bankruptcies as many company bankruptcies had not existed as since 2015. Experts had expected a significant increase after state support from Corona pandemic. In addition, high energy prices, bureaucracy and political uncertainty burden companies. Another increase in corporate insolvencies in this country is expected for the current year.

Empty offices, empty coffers

The market for commercial properties has long been under pressure in many countries, for example because fewer office space is used because of the home office trend. Several businesses are also empty because consumers shop on the Internet.

A loan is then considered “in need” if the probability is estimated to be low that the borrower pays the money completely. In such cases, banks threaten losses. That could also affect the award of new loans.

Overall, however, the European banking sector shows itself resistant in a still difficult economic environment, according to BearingPoint. Many banks were able to maintain or even expand their net profits despite increased costs. The average total capital ratio rose to 23.5 percent in 2024 in the third year in a row.