Presentation of the OeNB’s 52nd Financial Stability Report
The Austrian economy is forecast to grow by 1.3% in 2027; at the same time, uncertainty in financial markets has increased. Credit growth increased at a modest pace and credit quality stabilised. Nevertheless, banks increasingly hold older non-performing loans in their books, with commercial real estate loans remaining an area of focus for supervisors. In the first half of 2026, the Austrian banking sector generated a high profit that was mainly driven by one-off effects. The sector’s strong capitalisation and, consequently, its high resilience are confirmed by the latest stress test result.
Austrian economy gains momentum despite a challenging environment
Risks in global financial markets have become more pronounced in 2026 amid increased geopolitical tensions and fiscal challenges. “Despite this demanding environment, the Austrian economy is signalling a pick-up in activity, and growth is expected to gain momentum in 2027 according to current forecasts, provided there are no further external economic or political shocks”, says OeNB Governor Martin Kocher. In the same vein, the economies in Central, Eastern and Southeastern Europe (CESEE) are proving resilient and have weathered economic and geopolitical turbulences well so far.
Credit quality stabilised, but non-performing loans remain longer on banks’ books
Following a major acquisition in Poland, the Austrian banking sector grew markedly in the first half of 2026, and credit growth in Austria showed an uptick. While mortgage lending picked up speed, corporate lending stagnated for the fourth consecutive year. Due to the high relevance of real estate collateral for lending, Austrian banks remain strongly exposed to real estate risks.
Austrian banks’ stock of non-performing loans (NPLs) is increasingly ageing and weighing on banks’ capital. NPLs increased once the low interest rate environment had ended, and banks have made comparatively limited progress in their work-out. Even though overall credit quality has stabilised at an NPL ratio slightly below 3%, the NPL stock has risen in absolute terms. This means that, despite an overall stable NPL ratio, additional risks continue to exist in banks’ loan portfolios. This applies, in particular, to 56 of 314 Austrian banks that report an NPL ratio above 5%.[1] With an NPL ratio above 8%, domestic commercial real estate (CRE) loans continue to be a specific supervisory focus. Against this background, the sectoral systemic risk buffer requires affected banks to hold additional capital against these risks in order to be able to better absorb potential losses and strengthen the stability of the banking sector. The buffer rate is 3.5% of risk-weighted CRE loans and is being implemented gradually until mid-2027. Since 1 July 2026, it has been 2%.
The OeNB’s CRE dashboard now also features a commercial property price index that helps monitor the market value of CRE collateral. According to this index, CRE prices in Austria fell by approximately 10% between the 2022 interest rate reversal and end-2024, before broadly stabilising. The prices of residential real estate (RRE) in Austria, which also bottomed out at end-2024, rose only slightly in the first three quarters of 2026. Despite rising prices and increased lending activity, the Austrian RRE market shows little evidence of a renewed accumulation of systemic risks – also because the Financial Market Stability Board’s borrower-based criteria are being complied with across the market.
High profits support banking sector’s strong capitalisation
The Austrian banking sector’s profit surged to EUR 9.3 billion in the first half of 2026 – largely driven, however, by one-off factors (in particular, substantial upward revaluations of participations) and the acquisition of a bank in Poland. Moreover, Austrian banks’ overall CESEE business contributed a substantial EUR 3.3 billion. “The high profitability of recent years and the retention of profits have resulted in a highly resilient and well-capitalised banking sector”, says OeNB Executive Director Thomas Steiner. The result of the OeNB stress test supports this assessment: Austrian banks as a whole would be able to cope with the pressure even in the event of a severe economic downturn.
Summary
In a consistently challenging economic environment, it is important that the Austrian banking sector maintains its resilience in order to meet the financing and investment needs of households and businesses. To keep systemic risks at bay, the OeNB emphasises the importance of banks
• ensuring adequate credit risk management, especially for real estate loans, including
- the active management and determined reduction of NPLs,
- higher provisioning (especially for the unsecured part of loans) and
- conservative collateral valuations;
• investing in cybersecurity and digitalisation, while ensuring general cost discipline, and
• ensuring a balanced relationship between profit retention for capital generation as well as acquisitions and dividend payments.
[1] Together, these 56 banks account for around 9% of total assets of the Austrian banking sector.
