European banks to suffer sharp rise in loan losses after COVID-19 slump - Moody's

LONDON, July 21 (Reuters) - Fallout from the coronavirus
outbreak will cause a sharp rise in loan losses at European
banks, a report from credit ratings agency Moody's Investor
Service showed on Tuesday.

Loans to small and mid-size enterprises and unsecured
consumer loans in Europe, which grew by more than 20% between
end-2014 and June 2019, were seen most at risk, Moody's said.

The coronavirus economic downturn is expected to drive a
deterioration in loan quality, with the percentage of problem
loans estimated to rise by between 100-300 basis points by 2022
for most European banks, the agency added.

Problem loans in these segments at European banks were 8.5%
and 5.6% respectively at the end of June 2019, following a
decline from 18.5% and 8.1% respectively in June 2015. This
compares with 2.1% for larger corporates and 2.7% for
residential mortgages.
(Reporting By Sinead Cruise, editing by Huw Jones)