European lenders perform poorly by nearly every measure used to assess asset quality in the 2015 Top 1000 World Banks ranking. The only criterion where they do not hold the majority among the worst performers is total capital ratio – Japanese lenders hold sway by that measure. Nonetheless, as poor asset quality was also a problem for European lenders in last year’s ranking, on the whole there has been noticeable improvement across all criteria.
With regards to asset quality, the situation worsened for Cypriot and Greek banks, but largely improved in the rest of the eurozone. While the stock of non-performing loans (NPLs) decreased at other troubled European institutions, such as Allied Irish Banks, where the NPL ratio dropped nearly six percentage points to 29.98%, it soared at Bank of Cyprus, bringing its ratio to 63%, the highest in the Top 1000. Another Cypriot institution, Hellenic Bank, follows in second position, with 56.6% of its loans in arrears. NPLs at Greece’s banks have also risen, to as high as 38.8% for the Piraeus Bank Group. As was the case in the 2014 Top 1000 World Banks ranking, all of the big four Greek banks – Piraeus, Eurobank Ergasias, Alpha Bank and National Bank of Greece – are featured in the top 25 for NPLs.
