Forvis Mazars, the international leader in audit and assurance, tax and advisory services, released the ninth edition of its financial reporting of European banks study. Based on expected credit losses (ECLs) using 2024 annual reports for leading banks across Europe, the study indicates a strong position to weather growing economic risks.
Additionally, Forvis Mazars in Poland released a supplementary report focusing on 18 banking groups across the CEE region, including 10 from Poland. The supplement confirms the resilience of CEE banks, while also pointing to improving indicators related to non-performing loan (NPL) portfolios.
Key insights from the CEE supplement
- CEE banks saw a drop in credit losses in 2024, with net ECL charges down by 4.9%. While positive, this decline was smaller than the 8% drop reported by Western European (WE) banks.
- Loan loss coverage ratios fell for CEE banks, landing at 3.52% by the end of 2024 (down from 3.89% in 2023). That 37 basis point drop is sharper than the 10 bps decline observed for WE banks
- The biggest driver was a drop in Stage 3 coverage, which fell from 61.4% to 57% – a 440 bps decrease, much steeper than the 80 bps decline among Western peers.
Disruptive U.S. tariff instability is expected to impact credit quality and investment in future financial reports, but current figures show that credit risk was historically low in 2024, leading to greater capacity to face emerging risks in 2025.
Based on year-end financial disclosures from 18 major CEE banking groups, the supplement reveals that:
- Trends observed in the CEE region align broadly with those seen among WE banks.
- The loan portfolio ECL coverage declined in 2024, with the average coverage ratio for loans measured at amortised cost falling to 3.52% from 3.89% in 2023. The 37 basis point decline in CEE banks exceeded the 10 basis point reduction seen among WE peers.
- The cost of risk as a percentage of operating profit also declined in the CEE region, dropping to 8.5% in 2024 from 9.8% in 2023. This was driven by lower impairment charges on ECLs and an average increase in operating profit of 13%. A similar trend was observed among WE banks, where a 20% increase in operating profit was accompanied by a decrease in cost of risk to 12% in 2024 from 16% in 2023.
- CEE banks reported a 6.24% average increase in gross loan exposure, while total ECL allowances decreased by 3.5%.
- The distribution of exposures across IFRS 9 stages remained relatively stable: 83.7% of exposures were classified as Stage 1 and 4.4% as Stage 3 in 2024, compared to 84.3% and 4.5% respectively in 2023. However, Stage 2 exposures rose to 11.9%, up from 11.2%.
- Stage 3 coverage dropped significantly to 57% in 2024, down from 61.4% in 2023—a 440 basis point decline.
- Compared to WE banks, CEE banks have a higher share of Stage 3 exposures (4.4% vs. 2.1%) and a lower proportion of Stage 1 exposures (83.7% vs. 89.2%) as of year-end 2024.
Szymon Turkowski, Partner, Forvis Mazars in Poland who oversaw the preparation of the CEE supplement, commented: “The credit portfolios of CEE banks remain riskier than those of their Western European counterparts, but they also experienced a decline in credit risk throughout 2024. We observed a significant 440 basis point drop in Stage 3 coverage, contributing to a total loan portfolio coverage reduction of 37 basis points. These reductions exceed those seen in WE banks—80 basis points for Stage 3 and 10 basis points for the total portfolio. This improvement signals strong preparedness among CEE banks to absorb potential shocks, particularly in light of shifting geopolitical conditions. We anticipate that recent changes in U.S. trade policy, which are not reflected in the 2024 results, could play a role in 2025 performance.”
About the study
The initial Forvis Mazars study is based on publicly disclosed annual report data from 26 European banks, released prior to 1 April 2025. The CEE supplement draws on disclosures from 18 banks, published before 1 July 2025. Neither report includes press releases, investor presentations, or other similar communications. The full methodology is detailed within the main report and supplement.
