Asset quality improves at most major European banks in Q4’21

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A majority of European banks with more than 100 billion euros in assets have seen their problem loans fall ratios on an annual and quarterly basis in the fourth quarter of 2021, while two of the region’s five largest lenders saw increases in bad debt levels, according to data from S&P Global Market Intelligence.

Annual change

The problem loan ratios of Italian lenders BPER Banca SpA and Banco BPM SpA decreased by 222 basis points to 4.16% and 149 basis points to 4.83%, respectively, on an annual basis, marking the highest decline among the 26 banks in the sample. Still, BPER Banca and Banco BPM ranked first and third in the ranking of banks by problem loan ratio.

Spain’s Banco Bilbao Vizcaya Argentaria SA and CaixaBank SA and Portugal’s Caixa Geral de Depósitos SA complete the top five with ratios of 4.23%, 3.86% and 4.07%, respectively, while Swedish lenders Svenska Handelsbanken AB (pub), Swedbank AB (pub) and Skandinaviska Enskilda Banken AB (pub) continue to report the lowest ratios among the banks in the sample.

Q4’21 against Q3’21

BPER Banca also saw the biggest drop of 52 basis points in its problem loan ratio on a quarterly basis, followed by British lender Lloyds Banking Group PLC and French group BPCE respectively. Caixa Geral de Depósitos, which saw a 52 basis point year-over-year decline in its problem loan ratio, posted the largest quarter-over-quarter increase of 9.70 basis points. based.

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The Danish company Nykredit A/S, the Spanish company Banco de Sabadell SA and the Swedish company Svenska Handelsbanken AB (publ) also recorded increases in their ratios on a quarterly basis, while all the other banks in the sample recorded drops.

Problem loan levels

Meanwhile, problematic lending levels at two of Europe’s largest banks by assets – Banco Santander SA and HSBC Holdings PLC – increased year-on-year to €33.23 billion from €31.77 billion and €16.53 billion from €15.61 billion, respectively, according to data from Market Intelligence. Santander recorded the highest level of problem loans during the period among the five banks.

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France-based BNP Paribas SA and Crédit Agricole Group and UK-based Barclays PLC all saw a drop in the level of their problem loans to €27.82 billion from €30.07 billion , at 21.64 billion euros against 23.33 billion euros and at 8.61 billion euros against 30.07 billion euros. 10.04 billion, respectively. Barclays had the lowest level of problem loans.

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