The stock of non-performing loans in Germany continues to grow. However, what matters more than this stock is how many loans are already heading that way. We put the latest figures into context and show what matters for financial institutions right now.
NPL stock in Germany: EUR 53.1 billion by 2027
The NPL Barometer 2026, published by BKS (Bundesvereinigung Kreditankauf und Servicing) and the Frankfurt School of Finance & Management, paints a clear picture. At the end of 2021, the stock of non-performing loans (NPLs) held by German banks stood at EUR 29.7 billion. By the end of 2025, it had reached EUR 48.6 billion, an increase of around 64 per cent. The panel expects EUR 50.4 billion by the end of 2026 and EUR 53.1 billion by the end of 2027.
Insolvency figures are also on the rise. According to the NPL Barometer, there were 24,064 corporate insolvencies in Germany in 2025. The credit agency CRIF expects up to 26,000 cases in 2026.
Stage 2 loans: an early warning sign of future defaults
Another figure is more telling than the NPL stock. According to the NPL Barometer, 15.0 per cent of loans in the German sample of the European Banking Authority (EBA) were in Stage 2 at the end of March 2026. These are loans whose risk of default has risen significantly since they were granted, but which are not yet classified as defaulted. The EU average was 9.1 per cent.
These loans are not yet non-performing. But they show where tomorrow’s NPLs may arise. And this is precisely where institutions can still act today.
NPL ratios in commercial real estate and SMEs
Commercial real estate (CRE) and SMEs are under particular pressure. For commercial real estate, the Barometer panel expects an NPL ratio of 6.5 per cent at the end of both 2026 and 2027. For SMEs, the ratio is expected to rise from 4.3 per cent in the first quarter of 2026 to 5.1 per cent by the end of 2026 and 5.7 per cent by the end of 2027.
The causes differ. Commercial real estate is weighed down mainly by weak demand and tenants’ declining creditworthiness. Corporate loans are being hit by the weak economy and rising unemployment. For NPL and workout management, this means both segments need their own criteria for prioritisation and restructuring.
What banking supervisors expect on credit risk
Supervisors are also looking ahead. Martin Neisen, Peter Büttel and Wiebke Sawahn of PwC sum it up in Zeitschrift für das gesamte Kreditwesen (issue 4/2026): ‘The aim is to prevent future defaults and the build-up of new NPLs.’ (our translation) Around 40 per cent of the qualitative measures taken by the European Central Bank (ECB) in the 2025 Supervisory Review and Evaluation Process (SREP) related to credit risk.
The authors cite ‘best-in-class’ banks as the benchmark. In these banks, processes are embedded in IT systems and largely automated. Warning letters, watchlist entries and classifying loans as performing or defaulted all follow clearly defined escalation paths. According to the authors, a bank’s ability to detect crises early depends ‘essentially on [its] level of automation and the performance of [its] digital infrastructure’. In commercial real estate, by contrast, the supervisor’s on-site inspections often found that no system-based early warning process was in place.
Identifying and restructuring non-performing loans early
How well institutions weather the next two years will be decided before a default occurs. Those who identify critical exposures early have more options for restructuring. Those who document every decision in full are on firmer ground with supervisors and auditors.
Three questions can help you assess where you stand:
• Do you identify critical exposures systematically, or only case by case?
• Do your processes distinguish between commercial real estate and SME loans?
• Can you provide evidence of every step, from restructuring to wind-down?
With Credito NPL, we support credit institutions through the restructuring, recovery and wind-down of non-performing loans. Find out what this could look like for your organisation on our Credito NPL product page.
Note: The figures quoted are taken from third-party sources and are not FINNOFLEET’s own data. This article does not constitute financial or investment advice.
Sources
• BKS/Frankfurt School of Finance & Management: NPL-Barometer 2026, press release dated 15 September 2026,
• Neisen, Martin / Büttel, Peter / Sawahn, Wiebke: Regulatorische Agenda für Vorstand und Aufsichtsrat 2026 [Regulatory agenda for the management board and supervisory board 2026]. In: Zeitschrift für das gesamte Kreditwesen 4/2026, pp. 2–11
