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European Banking & Loan Portfolio Outlook 2023 – Market Update

Deloitte’s European Banking & Loan Portfolio Outlook 2023 – Market Update considers recent developments in the loan portfolio market and possible emerging trends for banks across Europe, including M&A value drivers and upcoming regulatory developments. The report provides an up-to-date overview of the latest loan portfolio transactions and banking performance supported by forward-looking insights provided by our Portfolio Lead Advisory Services and FIG M&A experts.
European Banking & Loan Portfolio Outlook 2023 – Market Update

The past 18 months have delivered a paradigm shift in European banking and loan portfolio markets. Higher interest rates, from early 2022, have (at least up until now) boosted bank earnings and profitability. For the first time since the GFC and European Sovereign Crisis, net profit after tax for the major listed banks in Europe was over €130bn – the highest level of profit since 2006.

Although unrelated to asset quality, global banking markets were tested in March due to events in the US and Europe. Specifically, the collapse of Silicon Valley Bank in the US and Swiss regulators intervening at Credit Suisse. Both events have left banks, regulators and policy makers with work to do, including how to manage liquidity in a digital age.

In terms of banks’ M&A activity, after a decade of low interest rates and low cost of funding across both the banking and non-banking sectors, funding cost disparity has returned and will remain a key factor driving both strategic and M&A decisions.

Key themes highlighted in this report include:

  • The European Banking sector performed strongly in 2022. Although only slightly higher in terms of aggregate profitability compared to 2021, the 2021 result  was inflated by writebacks of COVID provisions from 2020
  • Valuations for the European banking sector – even before the volatility during March – were subdued, despite the improved returns that the sector produced in 2022 and which are forecast to grow further in 2023/24.
  • Global banking markets were extremely turbulent in March 2023, driven principally by events in the US and Europe. Banking supervisors are already taking rapid action to ensure that the failings that drove several regional banks in the US and one Global-Systemically Important Bank (G-SIB) in Europe to the point of failure are not repeated.
  • Regulatory change and supervisory activity will carry implications for how much capital banks must hold against certain assets. This will come at a time when banks are already facing pressure from deteriorating credit quality and increased supervisory scrutiny around their management of risks.
  • From a banks’ asset quality perspective, the percentage of loans marked IFRS 9 continued its overall downward trend from 3.6% in 1Q19 to 2.1% in 4Q22. While the share of Stage2 loans decreased slightly to 9.4% in 4Q22 from 9.6% for 3Q22, levels remain elevated compared to 2019 (7.2% as at 1Q19), hinting at ongoing vulnerabilities which could translate into higher levels of credit impairment in the future, if ongoing challenging macroeconomic conditions persist for any lengthy period of time.
  • Loan portfolio deal flow, which had recovered in 2021 as markets reopened as COVID lockdowns were eased, fell back again in 2022, with €63.4bn traded in the year (and €27.9bn ongoing as at 4Q22), through a combination of resilient asset quality and as higher interest rates and macroeconomic uncertainty dampened investor appetite.
  • Continued regulatory changes and stricter monitoring from regulators are widely expected to require banks to more proactively manage their balance sheets, and importantly RWAs and liquidity levels, which may drive transaction activity across the continent in the coming years. Banks are then expected not only to continue to sell NPL exposures but also to divest under-performing and other non-core exposures on a more proactive approach.
How to use the report findings
  • Use the data to explore loan sale activity and trends in key markets across Europe, including the key players and asset categories in each market.
  • Loan portfolio buyers and sellers: identify the most active players in the European market.
    Debt investors: discover which markets are likely to present the largest investment opportunities.
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Interactive dashboard

Deloitte’s interactive dashboard provides detailed information and analysis on recent loan portfolio transactions which is regularly refreshed to provide an enhanced reader experience. To request access to the full interactive dashboard, please email

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