Assets: volume and composition

Banks boost loans and investments while reducing cash reserves

The uncertain macroeconomic environment and increasing geopolitical tensions have not weighed materially on banks’ risk appetite, as these grew their assets quicker than in earlier years. In December 2024, EU/EEA banks reported total assets of almost EUR 28.2 tn, which reflected an increase of EUR 885 bn, or 3.2%, since December 2023. This surge, which was mainly concentrated in the first half of the year, compares with a smaller YoY increase of 1.1% (or EUR 308 bn) observed in 2023.

The growth in assets was primarily attributed to an increase of approximately EUR 580 bn (+3.4%) in outstanding loans and advances, which totalled EUR 17.7 tn in December 2024. At the same time, banks reported a notable increase in debt securities (EUR 375 bn, +10.8%) and equity holdings (EUR 150 bn, +37.0%)^[17]. EU/EEA banks reported total exposures to debt securities of EUR 3.9 tn, while total equity holdings were reported at EUR 560 bn. The asset growth was partly offset by the constant and continuing declining cash balances (decrease of EUR 480 bn, -13.7% YoY). Despite the significant reduction, banks still reported EUR 3.0 tn of cash balances in their books (around 11% of total assets) (Figure 5).

Source: EBA supervisory reporting data

Lower interest rates support household lending

In 2024, outstanding loans to NFCs and households grew by 1.8%, reaching almost EUR 13.5 tn, mainly supported by decreasing interest rates and expectations for further monetary easing, but also loosening credit standards for some segments. Total loans to households exceeded EUR 7.1 tn (+2.2% YoY), primarily driven by a surge in mortgage loans (+1.8% YoY), reaching EUR 4.5 tn. Consumer credit increased much more sharply over the year (+6.6% YoY), yet its share in total household lending is much smaller (EUR 1.1 tn).

Based on lending surveys, in most euro area (EA) countries there was a moderate increase in the net demand for house purchase loans during the first half of the year, followed by a significant rise in the second half. The net increase in housing loan demand was largely attributable to developments in interest rates and, to a lesser extent, to the improvement in the housing market conditions for buyers. At the same time, credit standards for housing loans eased significantly during 2024 and continued to show moderate easing in the first quarter of 2025, mainly driven by competitive forces from other banks. The favourable interest rate environment also contributed to the net increase in demand for consumer credit. This rise occurred despite adverse impacts from low consumer confidence, affecting durable goods spending, and alternative financing options provided by non-bank institutions^[18].

Outside the EA, there has similarly been some relaxation in credit standards towards household lending, especially since early 2025, while demand increased somewhat. For instance, Polish banks changed the lending policy for households in H2 2024, from previously tightening to easing standards, especially on consumer credit, primarily due to increased competitive pressure. The change in lending policy was generally accompanied by growing demand^[19]. In Norway, household loan demand hardly grew in 2024, but improved slightly in Q1 2025. Overall, credit standards for households remained largely unchanged during 2024, but started easing in Q1 2025^[20].

The diverse macroeconomic conditions across countries in the EU/EEA and the unique market dynamics in each country resulted in varied growth trends in loan volumes by segment at national level. However, despite differences in magnitude, the positive dynamics in mortgage lending were broad-based, with only a handful of countries reporting a decrease in outstanding mortgages or consumer credit (Figure 6).

Source: EBA supervisory reporting data

Box 1: EU/EEA banks’ interconnections with NBFIs The significant links between EU/EEA banks with different types of NBFIs (through both their assets and their liability structures) might constitute a major channel of contagion in times of market turmoil. As of December 2024, EU/EEA banks’ exposures to NBFIs amounted to 10.1% of their total consolidated bank assets (Figure 7). These are mostly concentrated in larger banks, while smaller banks have fewer interconnections with NBFIs. Large banks have exposures amounting to 10.4% (or EUR 2.64 tn) of total consolidated bank assets, followed by medium-sized banks at 8.5% and small banks at 5.0%. Non-trading loans are the primary type of these exposures, followed by over-the-counter (OTC) derivatives and trading loans. Interconnectedness of the banking sector with NBFIs is exacerbated by their importance as a source of funding for EU/EEA banks. On the liabilities side, NBFI funding from EU/EEA banks – excluding market-based wholesale funding such as debt securities issued – amounts to 10% (or EUR 2.83tn) of total consolidated bank assets (Figure 8)[21]. From that 10%, deposits are the primary source of funding (both overnight and with agreed maturity) followed by repo funding. EU/EEA banks also maintain notable off-balance-sheet linkages with NBFIs. As of December 2024, undrawn loan commitments, financial guarantees and other commitments extended to NBFIs accounted for 7.3% (or EUR 0.95 tn) of total off-balance-sheet contingent liabilities (Figure 9). At the same time, NBFIs play an important role in providing loan commitments, financial guarantees and other commitments to EU/EEA banks, with such commitments accounting for 8.8% (or EUR 1.53 tn) of the total off-balance-sheet contingent assets of EU/EEA banks (Figure 10). Off-balance sheet exposures are almost solely driven by larger banks. Compared to the previous year, at aggregate level, interlinkages between banks and NBFIs remained largely stable, with a slight increase in exposures on the asset side and a modest decrease in interlinkages on the liability side. Medium-sized banks in particular recorded the most notable changes, with interlinkages increasing both on the asset and liability sides. Conversely, small banks mainly reduced their funding interlinkages with NBFIs. Off-balance-sheet items remained generally stable, with a slight increase in commitments given to NBFIs and a slight decline in commitments received from NBFIs. These changes were largely driven by medium-sized and small banks. The increasing complexity of the global financial system in a context of heightened geopolitical and economic uncertainty may exacerbate downside risks for the EU banking sector. These may be particularly relevant, as a significant part of these exposures are related to non-EEA counterparties. For example, exposures towards US counterparties are quite significant, amounting to more than EUR 400 bn. The banking sector’s reliance on NBFIs introduces systemic risks that can undermine financial stability. These not only include heightened interconnectedness, where stress in NBFIs can rapidly spill over to banks, and regulatory arbitrage, as riskier activities migrate to less regulated entities. Liquidity mismatches and leverage in NBFIs can trigger fire sales and market disruptions, indirectly affecting banks through declining asset prices or funding pressures. Additionally, the opacity of NBFI operations creates data gaps, making it difficult for banks and regulators to assess and manage risk. This interconnected and opaque landscape may also foster excessive risk-taking and reduce the effectiveness of monetary policy, ultimately increasing the vulnerability of the entire financial system. Figure 7: EU/EEA banks’ asset exposures to NBFIs, as share of total assets, December 2024 Source: EBA supervisory reporting data Figure 8: EU/EEA banks’ liability interlinkages with NBFIs (excluding market-based funding), as share of total assets, December 2024 Source: EBA Supervisory Reporting data Figure 9: EU/EEA banks’ share of loan commitments, financial guarantees, and other commitments to NBFIs, December 2024 Source: EBA Supervisory Reporting data Figure 10: EU/EEA banks’ share of loan commitments, financial guarantees, and other commitments received from NBFIs, December 2024 Source: EBA Supervisory Reporting data

Corporate lending is recovering but geopolitical tensions expose banks to downside risks through sector-level vulnerabilities

As of December 2024, loans to NFCs totalled EUR 6.4tn, reporting an increase of almost EUR 90 bn from the same period one year earlier (+1.4% YoY). EU/EEA banks reported EUR 2.6 tn in small and medium-sized enterprise (SME) exposures, up by 0.9% YoY (EUR +25 bn), and loans collateralised by CRE were about EUR 1.5 tn, up by 2.9% YoY (EUR +40 bn).

Bank lending surveys report that, in most EA countries, banks upheld their stringent credit standards for loans and credit lines to enterprises, demonstrating low risk tolerance due to higher perceived vulnerabilities related to the economic outlook. The results of the last EBA’s RAQ suggest that banks are more willing to extend loans to SMEs but rather reluctant to increase their exposure to CREs. ECB lending surveys agree on this, showing that in the second half of 2024, the tighter credit standards were mainly related to particular sectors like CRE, trade, construction and manufacturing. At the same time, corporate demand for loans increased moderately, due to lower interest rates in the final two quarters of 2024, albeit remaining weak overall because of low fixed investments, before moving back into slightly negative territory in the first quarter of 2025. The sluggish demand reflected the ongoing economic weakness, especially in investment-heavy sectors being severely affected by rising geopolitical uncertainty.

Outside the EA, there were mixed developments in NFC lending demand and credit standards. For instance, in Norway, NFC credit demand was stable in the first three quarters of 2024, before it started to modestly increase in Q4, including for CRE loans. Credit standards also remained broadly unchanged^[22]. By contrast, Polish banks started to ease credit standards for SME loans in Q2 2024, primarily due to rising competition. Demand from corporates also picked up, including from large enterprises, driven by loans for working capital, mergers and acquisitions (M&A) and fixed investments^[23].

Considering the current intense geopolitical uncertainty, the sectoral-level financing needs and lending dynamics might change significantly in the near future. This is not least due to a possible readjustment of supply chain and demand dynamics as a result of the imposition of trade tariffs or the need to rearm Europe^[24]. Sector-level data shows that the loans for electricity, gas, steam and air conditioning supply activities increased by more than EUR 20bn (+6.5% YoY). EU/EEA banks also increased their exposure through loans for financial and insurance activities, which reported the second largest rise in volume (EUR +17 bn). By contrast, EU/EEA banks reported a decline in outstanding loans to the public administration, defence and compulsory social security (-12.3% YoY), as well as mining and quarrying (-3.3% YoY) sectors in 2024. Lending to manufacturing, as one of the presumably more vulnerable sectors going forward, only marginally increased (Figure 11).

Figure 11: Growth in loans to NFCs by sector from December 2023 to December 2024, and share of total NFC exposures

Source: EBA Supervisory Reporting data

The new tariff policy by the US administration is intended to restore trade imbalances between the US and its global trading partners. The imposition of tariffs is expected to primarily adversely affect those sectors that exhibit a substantial export flow in terms of volume and value to the US. Data from the US International Trade Data Commission shows that, in 2024, EU countries in total exported more than USD 650 bn worth of products. Pharmaceutical products, machinery, vehicles, electrical products and organic chemicals accounted for more than 60% of these exports. It suggests that the manufacturing sector is probably among the most affected sectors, as the six^[25] largest categories of EU/EEA exports are classified under manufacturing goods (Figure 12).

[*] Bubble size denotes the value in EUR bn of the largest export product for each country

EU/EEA banks reported close to EUR 1 tn loans to manufacturing as of the end of 2024. According to Environmental Social and Governance (ESG) Pillar 3 disclosure data, around 35% of these manufacturing loans are to sectors that resemble the largest export categories to the US. Although the EU banking sector is materially exposed to companies in the automotive industry, this does not exceed 8% of total manufacturing loans. Spanish, German and Italian banks have provided the biggest share of these loans. EU/EEA banks also have material exposure towards companies related to steel and aluminium, for which the imposition of additional US tariffs will presumably have an adverse effect, and also affect other important sections of manufacturing such as basic metals, fabrication of metal products, etc. US tariffs on EU exports of steel and aluminium could also impact mining and quarrying; however, the overall exposure of EU/EEA banks to this sector is around 1% of total NFC exposures, and the mining of metal ores consist of around 20% of these. Agricultural product export companies may also be confronted with a challenging economic environment. EU/EEA banks have direct exposures of close to EUR 230 bn to the agricultural sector, with French and Dutch banks reporting more than 60% of these loans. Other sectors that could be adversely impacted include wholesale and retail sectors, construction or transport.

A shift in the supply chain dynamics, with either changing suppliers or sourcing locations, restructuring logistics and transportation, onshoring or nearshoring production, or a realignment of demand-supply conditions, could have a broader effect on not only corporates but also on households, and would have a broader reach. The impact on individual banks from a potentially escalating scenario of further and rising tariff implementations will be mainly determined by the actual format of such a conflict and whether their clients are directly or indirectly affected by the imposition of increased tariffs. Such effects could manifest as rising impairments of EU/EEA banks against exposures towards struggling enterprises, as clients that are involved in trade-sensitive sectors may face an increased default risk on loans. Escalating geopolitical tensions, however, will potentially have a much broader impact through slower economic growth, not only because of weaker credit demand but as also because of investment delays due to uncertainty (see Chapter on Macroeconomic environment and market sentiment). To address these ‘known unknown’ risks, EU/EEA banks use overlays. 90% of the banks surveyed in the RAQ, report the use of overlays, of which around 40% use overlays to address geopolitical risks followed by ’other’, in which a number of banks explains that these relate to sectoral and industrial specific risks stemming from macroeconomic uncertainty.

[*]Exposures to the US include also sovereign exposures, which in several cases is a major driver of banks’ exposures to this country.

Although a disruption in trade and supply chain balances could prove challenging for many European corporations, as they may struggle to readjust to the new environment, the ambitious initiative of the Commission to enhance Europe’s global competitiveness through the Competitive Compass could prove beneficial for many sectors and mitigate these detrimental effects^[27]. Although benefits are expected to have a broad reach, they might particularly be seen in the technology and energy sectors by closing the innovation gap and reducing dependencies and enhancing security, or sector-specific action plans for industries, such as supporting the decarbonisation and competitiveness of the steel, chemicals and metals industries.

The plan to rearm Europe could additionally boost the manufacturing sector, as it will significantly boost defence spending across the EU. This is expected to channel substantial investment towards various sectors, including manufacturing and technology. Although funding is expected to come from EU-level programmes and Member States alike, and also depending on the fiscal space of each country, private finance is also expected to play a role in these developments. For instance, EU/EEA banks are expected to sustain defence-related firms through direct corporate lending, as well as infrastructure tied to defence readiness or research and development (R&D) centres for military innovation through project-based lending. The enhancement of R&D and innovation will most possibly have positive broad effects for other sectors and the economy.

EU/EEA banks further increase their sovereign exposures

In the context of the rearm Europe Plan and the broader shift in European defence strategy, EU/EEA banks could also play a role in financing the increasing needs of governments to ramp up defence spending. This would lead to a further increase in EU/EEA banks’ sovereign exposures, which were the main driver of the notable surge in EU/EEA banks’ debt securities holdings recorded over the last year. The increase was not solely attributable to the higher interest rate environment, which incentivised banks to secure long-term high returns. It also resulted from banks partially assuming the role of investors as the ECB phased out its bond purchasing programmes, and was linked to changes in their HQLA portfolios (see Chapter on Liquidity positions and NSFR and The impact of lower excess reserves on EU banks’ liquidity ratios and liquidity management). As of December 2024, EU/EEA banks reported around EUR 3.6 tn in total exposures to sovereign counterparties, which is a surge of more than 9% compared to December 2023 (EUR 3.3 tn). Almost half of these exposures were towards domestically domiciled counterparties, while 28% were towards other EU/EEA countries. Sovereign exposures towards non-EU/EEA domiciled counterparties were slightly above EUR 900 bn, up by around EUR 110 bn compared to the figures reported one year before (Figure 14). Of these, around 30% were towards the US Government. In respect of maturity buckets, around one third of sovereign exposures will mature in 1 to 5 years (33%), which has also increased on a yearly basis (by 2 percentage points (p.p.)), at the cost of the 10-year and longer bucket (down from 23 to 20%). Despite these and some other moves between the maturity buckets, a large share is still of a rather long-term nature, which entails elevated risks of these exposures to moves in interest rates. This is particularly relevant for exposures recognised at fair value (share of nearly 40% as of YE 2024).

Although banks in most jurisdictions have increased their sovereign exposures on an annual basis to varying degrees, the significant growth observed at aggregate level was primarily driven by French banks. These institutions contributed 38% of the overall increase in volume, with an annual expansion of EUR 118 bn (to EUR 1.15 tn). Spanish banks also made a substantial contribution, as their exposures to sovereign counterparties grew by nearly EUR 52 bn year-on-year (to almost EUR 590 bn) (Figure 15).

[*] The changes in sovereign exposures may also be affected by changes in the sample of banks for each country (e.g. Luxembourg).

The nexus between sovereigns and banks has weakened compared to a decade ago, due to a diversification of assets, the increasing strength of the EU/EEA banking sector as well as broad fiscal discipline by EU/EEA countries. The growing financing requirements of sovereign entities, along with the limited available fiscal space for some countries, coupled with the potential that banks could further materially increase their sovereign exposures, could potentially act as a trigger for the resurrection of this nexus. The feedback loop during times of financial stress can still be a source of risk for the banks, leading to a situation where the stability of the banking sector is tied to the creditworthiness of the sovereigns.

Significant variability in navigating climate risks

On climate risk-related considerations of EU/EEA banks’ exposures, disclosure data-based analysis indicates that more than 60% of NFC loans are subject to transition risks (share of exposures to NFCs in sectors that highly contribute to climate change)[13]. For mortgage exposures, disclosure data indicate that the majority of them are classified in the first two buckets of energy efficiency, with an energy performance lower than 200 kWh/m². Even though this seems to indicate a rather limited transition risk for this segment, this needs to be taken with caution, as the underlying data strongly relies on proxies and estimates with regard to energy efficiency data. Whereas the dispersion of respective risks among countries is less pronounced for NFC loans, differences between countries are very wide. Finally, more than 20% of EU/EEA banks’ exposures are subject to physical risks, based on their disclosure data. Considering the significant differences between countries in methodology assessments, these numbers indicate that the climate risk of banks’ exposures is material and needs to remain a focus topic going forward.

Assets: outlook

EU/EEA banks forecast recovery in lending towards NFCs

According to EU/EEA banks’ three-year funding plans, total assets are projected to increase by 1.7% in 2025 (+2.9% in 2024), with banks expecting a higher asset growth rate in the subsequent two years (2.8% in 2026 and 2.7% in 2027). During this period, banks anticipate a rebound in lending to NFCs, reversing the sluggish growth observed in 2024. These are predicted to grow at 4.3% in 2025, with annual growth expected to remain close to 4% through 2026 and 2027. In contrast, loans towards households are forecast to increase modestly by 2.0% in 2025, down from 2.7% in 2024, before picking up pace to 3.3% in 2026 and 3.7% in 2027. Over the three-year forecast horizon, the cumulative growth in lending is expected to reach 13.1% for NFCs and 9.2% for households.

The decline in cash balances is projected to reverse, with EU/EEA banks planning to increase their liquid assets by 1.7% in 2025, followed by a further rise of 3.0% in 2026 and 4.4% in 2027. The planned trend in cash balances can presumably be explained by the end of TLTRO repayments and increased banks’ appetite to improve the structure of their liquidity amid current geopolitical tensions and economic uncertainty (see Chapter on Past changes in LCR composition, including HQLA). Contrary, the growth of debt securities is expected to materially slow down (2.7% in 2025, 1.0% in 2026 and well below 1% in 2027). The anticipated lower growth rates in debt securities can be attributed to the declining interest rate environment, which may discourage banks from increasing their exposure to debt securities, particularly those with longer durations. An opposite trend was actually observed in the previous years within a rising rate environment. Finally, EU/EEA banks' exposure to derivatives is expected to report a sharp decline of -8.5% in 2025 and then stabilise around their new level, presumably driven by underlying assumptions of interest rate and FX trends going forward. Also, a pull-to-par effect might explain parts of this expectation, amid a huge rise last year (see above in Chapter on Asset trends)^[30]. After double-digit annual growth rates in 2023 and 2024, EU/EEA banks’ equity holdings are expected to return to annual growth rates slightly above 2.5% over the next three years (Figure 16).

On a country level, banks forecast positive growth in their lending towards households in 2025 in nearly all countries, except for Norway and Ireland. At the same time, Greek banks expect only marginal growth in 2025, while Slovenian, Bulgarian and Hungarian banks project strong growth. All countries expect at least a 2.5% yearly growth rate for 2026 and at least 2.2% for 2027. Banks forecast a more aggressive growth rate for lending towards NFCs across the board, as also reflected in the EU/EEA expectation. Only Norwegian banks expect a decrease in their NFC lending for 2025. In contrast to household lending, Irish banks expect a double-digit growth rate in 2025 (10.7%) for their NFC exposures, following Bulgarian and Romanian banks (13.8% and 12.3% respectively) (Figure 17).

For the years 2025 and 2026, banks do not expect significant changes to their overall asset composition. At the end of the forecast period (December 2027), the share of loans to households is set to remain close to 25% of total assets and that of loans to NFCs is expected to increase from 21.4% in 2024 to 22.5% amid their assumed relatively strong volume growth of the forecasting period. Banks forecast the share of debt securities and loans to financial corporates over total assets to remain almost constant, representing 13.2% and 6.5% respectively. Cash balances are expected to remain somewhat elevated at 9.9% of banks’ total assets compared to pre-pandemic levels (7.6% in 2019) amid the assumed change in the composition of liquid assets, yet lower than their post-pandemic levels (11.7% in 2023) (Figure 18).

Asset quality trends

The deterioration in banks’ asset quality has marginally increased

By the end of 2024, EU/EEA banks reported EUR 375 bn of NPLs, which is an increase of EUR 10bn compared to December 2023 (EUR 365 bn). With the exception of the last quarter of 2024, NPLs have been increasing steadily over the last two years (+5% from their lowest point of March 2023). The NPL ratio was reported at 1.88% in December 2024, showing a marginal increase over the course of 2024 (+4 bps compared to the end of 2023 and 13 bps compared to March 2023) (Figure 19).

The overall rise in NPLs was, however, not uniformly distributed across countries. It was predominantly driven by substantial increases in Germany, amounting to EUR 9 bn or a 23% YoY increase. Additionally, there was a smaller but significant rise in France, the Netherlands and Austria. Conversely, Spanish and Italian banks reported notable reductions in their NPL volumes compared to the previous year. The highest NPL ratio was recorded by Polish banks at 3.8%, followed by Greek and Romanian banks at 2.9%. Despite these figures, the NPL ratios in Poland and Greece decreased on a YoY basis (Figure 20).

Stage 2 loans surge to historically high levels

EU/EEA banks reported a significant increase of 4.4% in the allocation of IFRS9 Stage 2 loans in 2024, amounting to EUR 1.56 trillion as of December 2024. The proportion of Stage 2 loans to total loans reached 9.7%, representing the highest level recorded by EU/EEA banks. Furthermore, Stage 3 loans increased by 3.4% (or EUR 12 bn), reaching EUR 352 bn. Similar to the increase in NPLs, the surge in Stage 2 loans reported for 2024 was unevenly distributed across countries. Notably, German banks reported an increase of more than 44% in Stage 2 loans (or EUR 104 bn), contributing significantly alongside Dutch banks to the overall rise in Stage 2 loans. By contrast, Italian and Belgian banks reported a substantial decrease in Stage 2 loans (over 20%). Figure 21 illustrates that the reallocation of loans from Stage 1 to Stage 2 in German and Dutch banks was more significant, but was reported by fewer banks, while the reallocation from Stage 2 to Stage 1 in other countries was more widespread but less intense.

The substantial increase in the volume of Stage 2 loans was primarily driven by household loans, evenly attributed to mortgage loans and consumer credit. In 2024, the proportion of Stage 2 loans for consumer credit reported by EU/EEA banks rose by over two percentage points, reaching 11.8%, which equates to an increase of EUR 25 bn (+29%). During the same period, EU/EEA banks also indicated a higher allocation of Stage 2 loans collateralised by RREs (EUR +27 bn, +8%). The share of Stage 2 mortgages increased from 7.7% in December 2023 to 8.2% in end of 2024. Stage 2 loans to NFCs remained stable last year; however, loans collateralised by CRE exhibited the highest Stage 2 allocation (17.7%), followed by loans directed towards SMEs (14.8%), both figures being close to those reported one year earlier. An increase in the NPL ratios was only evident in corporate lending (also partly due to a slower increase in the denominator). NPL ratios for NFC loans were reported at 3.5% in December 2024, up from 3.3% one year earlier. The increase in corporate NPLs was equally attributable to CREs and SME exposures. Contrary to the early warning signals sent by the increase in Stage 2 loans, the NPL ratio for households remained stable (2.1% of total household loans), despite the increase in NPLs, which was solely attributed to asset quality deterioration of consumer credit.

Banks anticipate stabilisation in asset quality

Despite the deterioration in asset quality metrics, the asset quality outlook, as indicated by the results of the spring 2025 RAQ, demonstrates a significant improvement in banks’ expectations. While a substantial portion of banks (40%) still anticipate a decline in asset quality for certain segments, such as SMEs, the overall outlook for other segments has been consistently improving since Q3 2023. In addition, banks increasingly expect a lower cost of risk levels, with 50% predicting less than 25 bps and nearly 90% forecasting under 50 bps for the current financial year. This trend aligns with the commencement of the monetary easing cycle, which has alleviated pressure on borrowers. Concurrently, robust labour market dynamics have continued to support banks’ asset quality (Figure 22). This is similarly reflected in funding plan data, according to which the NPL ratio remains stable during the forecast horizon. This comes with a small exception for NFC exposures, for which banks expect a slight uptick in the NPL ratio by 10 bps this year, followed by a decline afterwards. The rise in the NFC NPL ratio is due to a major rise in the respective NFC NPL volumes by nearly 7% this year (approximately 8% the forecast period of three years), while household NPLs are expected to increase by 5% in the next three years.