Italy: bad loans coverage ratio 2010-2017

As of 2017, the coverage ratio for bad loans of the Italian banking system stood at 61 percent. Bad loans in Italy represented ten percent of the total as of 2017. As the graph shows, the coverage ratio has increased steadily since 2014, helping the Italian banking system to grow in stability even though still not immune to external shocks.

A recovering system

Italian banks have been growing in stability since 2014. The stocks of non-performing loans and bad loans started diminishing for the first time after the financial crisis. Capital adequacy increased and Common Equity Tier 1 ratio reached a value of 12.5 percent for the whole banking sector in 2017.

The digitalization of the banking system

Italian banks have been implementing a slow transition from the traditional banking business model to a more diversified one. By reducing the number of branches, banks are starting to rely on digital resources. The digitalization of the system has experienced a strong acceleration in the last five years. For example, the use of online banking grew steadily from 2007 to 2018.

Bad loans coverage ratio in the Italian banking system from 2010 to January 2017

Coverage ratio
Jan ´1761%
201556%
201454%
201349%
201248%
201151%
201053%
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Source

Release date

March 2017

Region

Italy

Survey time period

2010 to January 2017

Supplementary notes

A bad loan is a loan where repayments are not being made as originally agreed between the borrower and the lender, and which may never be repaid.

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