The Austrian banking market
In 2024, there was a reversal in the trend in the housing finance business, which is important for Austrian banks. Following a significant decline in credit growth rates in 2022/23, negative growth slowed in 2024, and there was even slight growth in the first half of 2025. At the same time, the ratio of non-performing loans (NPLs) has been rising again since 2022, particularly in the commercial real estate sector. Due to the difficult economic environment, NPL ratios are expected to rise further, leading to higher credit risk costs.
As a result of key interest rates falling again since mid-2024, the interest margin at banks in Austria has also decreased slightly after the previous increase. However, most banks have so far been able to fully or partially offset the shrinking interest margins through rising lending volumes. Net commission income rose by over 60% between 2019 and 2024 and now accounts for more than a third of interest income.
Author
Erste Bank Research Team
Erste Bank
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