Over the past nine years, banking distress in Italy has seen a significant reduction, dropping from €337 billion in December 2015 to €50.2 billion by the end of 2023. However, the first half of 2024 showed a slight rebound, with distressed loans rising to €52.4 billion, marking a 4.4% increase.
According to a report by Unimpresa’s Research Center, this positive trend reflects a steady cleanup of bank balance sheets, yet the current economic context presents risks that demand close scrutiny.
Steady progress but lingering risks
Since 2015, total non-performing loans (NPLs) have decreased by 85%, with an overall reduction of €284.7 billion. This decline spans all categories of distressed credit, including bad loans, unlikely-to-pay exposures, and past-due loans.
As of December 2023:
- Bad loans amounted to €18.5 billion.
- Unlikely-to-pay exposures stood at €27.6 billion.
- Past-due loans represented €4.1 billion.
Despite this progress, 2024 saw a slight reversal, with bad loans increasing to €19.1 billion and past-due loans reaching €5.4 billion. These trends indicate potential vulnerabilities tied to macroeconomic factors.
Global economic uncertainty and its impact
Geopolitical tensions, such as the conflict in Ukraine and unrest in the Middle East, combined with China’s economic slowdown, are impacting global growth. For Italy, these factors translate into reduced competitiveness in export markets and increased insolvency risks.
Domestically, high public debt and rising interest rates, although recently softened by the ECB, further complicate credit access for families and businesses.
Vigilance as a priority for the banking system
Giuseppe Spadafora, Unimpresa’s vice president, emphasizes the need for prudential policies in credit management. “Despite recent improvements, the banking system remains vulnerable to economic shocks. Monitoring credit quality is essential to prevent a new crisis,” Spadafora asserts.
Controlling distressed loans, alongside cautious risk management in new lending, remains critical to ensuring financial stability.
