Non-Performing Loans plummet 22% in 2023

The amount of Non-Performing Loans in Portugal fell 22% in Portugal last year, one of the most expressive falls in Europe.

This is according to consultancy Prime Yield that says the credit default stock in Portugal’s financial system stood at €5.6Bn by the end of the third quarter of 2023, compared to €7.2Bn registered like-for-like in 2022.
The fall of 22% places Portugal among those countries in the European Union with the best performance in reducing NPLs.
The ratio of NPLs also went down to 2.8% of all loans in the 3rd quarter and for the very first time was below 3.0%. Nevertheless, it was still above the European average and remains one of the highest ratios in Europe.
Portugal’s continued progress in reducing NPLs has had an impact on the sale of these types of portfolios, with less appearing on the market after a flurry of sales to equity companies from the banks over the past few years.
Prime Yield estimates that inn 2023 NPL portfolios worth €1.4Bn (down 18% on 2022) but above 2020 when the market was at a standstill because of the pandemic.
For 2024, Prime Yield expects a more dynamic market activity for NPLs driven by sales in the secondary market.
Nevertheless, Portugal was one of the countries in Europe with the best performance in reducing NPLs in 2023 according to Prime Yield’s study ‘“Keep an Eye on the NPL&REO Markets – Portugal, Spain, Greece and Brazil’, concentrating 2% of Europe’s NPL stock, Portugal had a total NPL stock of €5.6Bn.