At the same time, Member States with high NPL ratios have also experienced below average GDP growth, consistent with the below-average propensity to invest that NPLs generate. The opposite picture is found for the Member States that exhibit a lower level of NPLs. Therefore, the effective management of NPLs is of the utmost importance for a country’s growth opportunities.
Banks − benefiting from improved asset quality, profitability and liquidity − will be in a better position to reduce the cost of credit risk and lending spreads. This amounts to a pivotal development for the competitiveness of the non-financial corporate sector in an international environment of ultra-low interest rates.