At an overall climate of 0.32, the German market for non-performing loans remains in 2026 almost unchanged from the previous year (0.31) and clearly in positive territory. Current situation (0.33) and expectations (0.32) are, for the first time since the pandemic years, virtually identical: the market keeps growing, but without the acceleration seen before.

Reported NPL volume has risen to a good €50 billion; the panel expects €50.4 billion by the end of 2026 and €53.1 billion by the end of 2027. The pressure sits in the pipeline: 15.0 per cent of loan volume is in Stage 2 (EU average: 9.1 per cent). The stress poles remain commercial real estate (NPL ratio 6.8 per cent) and loans to small and medium-sized enterprises, whose ratio the panel expects to rise to 5.7 per cent by 2027.

The full 2026 edition – all asset classes, scenarios and the bank-level special analysis – will be published on the NPL data platform on 16 September 2026 and will be available there to BKS members.

Results · Spring 2025

NPL Barometer spring 2025

Archived results of the spring 2025 survey. The full edition is available as a PDF download (German).

The detailed analysis reveals marked differences between asset classes. While residential real estate finance proves comparatively resilient with an NPL ratio of just 0.9 per cent, commercial real estate loans send the strongest stress signals. In that segment, 64 per cent of the institutions surveyed report growing NPL stocks, and half expect a further deterioration. Particularly notable is the development in unsecured consumer loans, where 67 per cent of respondents expect an increase over the coming year. The SME segment, too, shows clear signs of strain with an expected NPL ratio of between 4 and 6 per cent by the end of 2025.

The German Secondary Credit Market Act (Kreditzweitmarktgesetz), in force since the end of 2023, has left a lasting mark on the market. Together with Greece, Germany took a pioneering role in transposing the corresponding EU directive. The new regulatory requirements raise barriers to market entry and create significant administrative effort, which puts smaller participants in particular under pressure. At the same time, the European passport for credit servicers opens up new cross-border business opportunities. By the end of January 2025, 27 companies were registered as authorised credit servicing institutions.

The outlook for the coming years points to further growth in NPL volume. After the marked increase from €38.0 billion in 2023 to €46.6 billion in 2024, the majority of respondents expect a volume of between €40 and €50 billion by the end of 2025. For 2026, 44 per cent of the experts even expect growth to between €50 and €60 billion. The anticipated stabilisation of portfolio prices after the decline of recent years could make transactions more attractive for all market participants and revive the secondary market.

Market participants face the challenge of adapting their strategies to the changed environment. Many institutions combine classic workout management with digital solutions and selective portfolio sales. For specialised investors, supply is growing at the same time: rising NPL stocks meet increased cost pressure in the banking sector. The coming years will show how the German NPL market develops under the new regulatory conditions.

Methodology

How the NPL Barometer is calculated

Methodologically, the NPL Barometer follows the established ifo Business Climate Index. Experts from the NPL market – primarily bank risk management – are asked for their assessment of the current situation and their expectations for the next 12 months.

Balances are formed from the answers and condensed into an overall indicator. Index values range between −1 (contracting market) and +1 (growing market). For each question, the answer options are coded so that answers pointing to a growing NPL market enter with +1 – for NPL stocks, for instance, “has risen” (+1); for sale prices, “has fallen” (+1); “unchanged” counts as 0 in each case. The percentage results are then netted.

If, for example, 40% of institutions answer that prices have risen (−1), 30% that they are unchanged (0) and 30% that they have fallen (+1), the balance is (−1 · 0.40) + (0 · 0.30) + (+1 · 0.30) = −0.10. Balances are determined for every question and can thus be compared with one another and over time.

This approach has proven itself in the ifo index over decades and allows a reliable assessment of market development. Results are reported separately by asset class, such as real estate loans and corporate loans.

From the autumn 2023 survey onwards there was a change in how index values are calculated. In the past, answers of “not affected” were coded as 0 – in the same way as “don’t know” or “unchanged”. Since a significant share of participants selects “not affected” for some asset classes, this could substantially dilute the answers of those actually affected.

From autumn 2023, such answers are therefore removed from the base. This produces higher values overall, but a more realistic picture of the NPL market. For the autumn 2023 survey, the old method would have produced a current-situation value of 0.25, an expectations value of 0.34 and an overall climate of 0.29; under the new methodology the same values are 0.38, 0.54 and 0.46.

Participants from bank risk departments come predominantly from private banks, followed by Pfandbrief banks, savings banks, cooperative banks and Landesbanken. Within the institutions, respondents are mostly heads of department and heads of division, followed by other specialist positions and the management board level. The survey therefore covers a broad spectrum of the German banking landscape.