In recent years, Europe’s digital-only banks—or neobanks—have revolutionized personal and business banking with slick mobile apps, low fees, and innovative financial services. Yet as these fintech disruptors expand their lending portfolios, credit quality has become an increasingly important barometer of their long‑term stability. At the heart of this analysis lies the Non‑Performing Loan (NPL) ratio, a critical metric that reveals the percentage of loans in distress or default. In this article, we explore the top five European neobanks exhibiting the highest NPL exposure in 2025, dissecting the underlying factors—such as aggressive growth strategies, economic headwinds, and evolving credit underwriting practices—that have driven their loan books into riskier territory. Whether you’re an investor evaluating balance‑sheet resilience or a banking professional benchmarking risk management frameworks, understanding these NPL dynamics is key to navigating the next chapter of digital banking in the EU.
1. Starling Bank (UK)
- Indicators: Increased loan loss provisions from £34.5 million to £47 million in 2024, reflecting a cautious outlook on the UK economy.
- Context: Despite a 55% rise in annual pretax profit, the bank’s gross lending slightly declined to £4.7 billion, suggesting potential concerns over loan quality.Reuters
2. Zopa Bank (UK)
- Indicators: Transitioned from a peer-to-peer lending platform to a digital bank, inheriting a substantial personal loan portfolio.
- Context: The shift to traditional banking may expose Zopa to higher credit risks, especially in unsecured lending segments.
3. bunq (Netherlands)
- Indicators: Offers a range of financial products, including mortgages and business loans.
- Context: While specific NPL data is not available, the expansion into lending could increase exposure to credit defaults.
4. Revolut (UK/Lithuania)
- Indicators: Primarily generates revenue from transaction fees and interest on cash deposited with central banks.
- Context: Limited lending activities suggest a lower NPL ratio, but any future expansion into credit products could alter this risk profile.
5. N26 (Germany)
- Indicators: Focuses on current accounts and payment services with limited lending activities.
- Context: The minimal exposure to loans implies a low NPL ratio, but strategic shifts towards lending could impact this status.
Understanding NPL Ratios in Neobanks
Neobanks often maintain lower NPL ratios due to their limited lending activities and focus on digital payment services. However, as these institutions evolve and expand their credit offerings, monitoring NPL ratios becomes crucial to assess financial stability and risk management practices.
Conclusion
While specific NPL ratios for European neobanks are not publicly available, indicators such as increased loan loss provisions and expansion into lending services suggest varying levels of credit risk exposure. As neobanks continue to grow and diversify their financial products, stakeholders should closely monitor their risk management strategies to ensure sustainable operations.
Note: The above assessments are based on available information as of April 2025 and may be subject to change as new data emerges.