Financial Stability Report 52

Austrian banking sector resilient, but determined NPL reduction is important

Abroad, the Austrian banking sector grew markedly, and at home, credit growth has picked up slightly. Banks’ profits have surged, mainly due to one-off effects, while capitalisation and liquidity have remained solid. Credit quality has stabilised, but banks’ stock of non-performing loans (NPLs) is ageing. To keep systemic risks at bay, the OeNB emphasises the importance, among other things, of banks ensuring adequate credit risk management (especially for real estate loans), of determined NPL reduction and investments in cybersecurity and digitalisation.

Highlights

The economy is picking up, market risk increased
The Austrian economy is seeing an upturn, with growth expected to gain momentum in 2027. Nevertheless, risks in financial markets have become more pronounced, reflecting increased geopolitical tensions and fiscal challenges.

Stress tests show that banking sector is resilient
Results of OeNB stress tests indicate that the Austrian banking sector would be resilient to a severe macroeconomic shock, but results vary across the sector.

Supervision continues to focus on commercial real estate loans
The non-performing loans ratio of domestic commercial real estate loans has stabilised at elevated levels (above 8%), while interest rates are rising again. A sectoral systemic risk buffer has been put in place to address related risks.