In no other European country were more loans at risk of default added last year than in Germany.

Germany's banks are experiencing the highest increase in non-performing loans (NPLs) in Europe. Almost a quarter (24.9 percent) more non-performing loans (NPLs) were on their balance sheets for 2024 than a year earlier, according to an analysis by the consulting firm BearingPoint. The average NPL increase among the 163 European banks examined was 1.1 percent.

The main reasons for the sharp increase in Germany are "the sharp rise in the number of corporate insolvencies as well as the massive losses in value and rising loan defaults in the commercial real estate sector," explained BearingPoint.

Last year, Germany saw 21,812 insolvencies, the highest number of corporate bankruptcies since 2015. Experts had expected a significant increase after government support for the coronavirus pandemic expired. High energy prices, bureaucracy, and political uncertainty are also putting pressure on companies. A further increase in corporate insolvencies is expected in this country this year.

The commercial real estate market in many countries has been under pressure for some time, for example because the trend toward working from home has reduced the need for office space. Many stores are also vacant because consumers are increasingly shopping online.

A loan is considered "non-performing" if the probability that the borrower will repay the loan in full is considered low. Banks face losses in such cases, which could also affect the granting of new loans.

Overall, however, the European banking sector is proving resilient in a continuing difficult economic environment, according to BearingPoint. Many banks were able to maintain or even increase their net profits despite rising costs. The average total capital ratio rose for the third consecutive year, reaching 23.5 percent in 2024.