Hungary saw the largest reduction in the volume of non-performing loans (NPLs) among the 17 Central and Eastern European economies, according to a report by the European Bank for Reconstruction and Development (EBRD).
The volume of non-performing loans decreased by 9.5% over the past 12 months, above the regional average, to €4.2bn by the end of June. This represents an NPL ratio of 3% of the gross loan portfolio, a 0.4pp improvement. The regional average NPL ratio hit a record low of 2.08%, a 0.1pp decline.
Hungary’s NPL coverage ratio increased to 59%, up 3.5pp, slightly below the regional average of 64.4%.
The lower NPL and higher coverage demonstrate a stronger financial position for Hungary’s banking sector within the region, analysts said.
The report chimes [with the latest report by the Hungarian National Bank](https://pro.intellinews.com/hungarian-banking-sector-resilient-abundant-in-liquidity-central-bank-report-shows-355768/?source=hungary), which showed that the local banking sector’s resiliency is supported by high profitability, ample liquidity, robust capital adequacy, as well as a healthy loan portfolio.
Within the region, the highest coverage ratios were in Lithuania and Slovenia, at 117.7% and 99.9% respectively. Of the 17 countries surveyed by the EBRD, Ukraine had the highest NPL ratio, with 34.6%, down 4.4pp from 12 months ago.
According to the EBRD, stage 2 lending was 10.71% in the 12 months to June, falling from its peak of 12.15% in December 2022.