The asset quality of banks’ loan portfolios will remain a crucial determinant of their performance in the rest of the year. At the same time, the efforts of euro area LCBGs to bolster their capital buffers have contributed to maintaining their current regulatory capital ratios at levels that conform to the regulatory minimum requirements.
B. Non-performing loans (NPLs) and developments in the banking sector With about € billion in non-performing loans (NPLs) as of mid-2019, equivalent to 43.6% of all loans, Greece remains a crucial testing ground for the strategy of “risk reduction” in the euro area. Although economic activity resumed in 2017, higher and sustainable growth rates require the end of banks’ deleveraging.