Pearse Doherty (Donegal, Sinn Fein)
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249. To ask the Minister for Finance to outline the definition used by Irish banks to determine non-performing loans for mortgages; and if he will make a statement on the matter. [13156/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Credit institutions engaged in mortgage lending in Ireland align their definition of non-performing loans (NPLs) with relevant European banking regulation.

The most relevant legislation is Regulation (EU) 575/2013 (the Capital Requirements Regulation), as amended, where Article 47a defines non-performing exposures (NPE) as those meeting any of the following criteria:

(a) an exposure in respect of which a default is considered to have occurred in accordance with Article 178 of the Regulation, including either where the obligor is deemed unlikely to pay by the institution and/or the obligor is more than 90 days past due on any material credit obligation to the institution;

(b) an exposure which is considered to be impaired in accordance with the applicable accounting framework;

(c) an exposure under probation pursuant to paragraph 7 of the Article, where additional forbearance measures are granted or where the exposure becomes more than 30 days past due;

(d) an exposure in the form of a commitment that, were it drawn down or otherwise used, would likely not be paid back in full without realisation of collateral;

(e) an exposure in form of a financial guarantee that is likely to be called by the guaranteed party, including where the underlying guaranteed exposure meets the criteria to be considered as non-performing.

Other relevant legislation includes EBA Guidelines on management of non-performing and forborne exposures and EBA Guidelines on the application of the definition of default.

Definitions used by credit institutions in Ireland for NPEs and NPLs (the terms are used interchangeably) are therefore largely aligned as follows:

AIB, in their 2024 Annual Report define non-performing loans as follows:

“Loans are identified as non-performing or defaulted by a number of characteristics. The key criteria resulting in a classification of non-performing are:

• Where the Group considers a borrower to be unlikely to pay their loans in full without realisation of collateral, regardless of the existence of any past-due amount; or
• The borrower is 90 days or more past due on any material loan. Day count starts when any material amount of principal, interest or fee has not been paid by a borrower on the due date”.

• credit-impaired loans which includes loans where the borrower is considered unlikely to pay in full without recourse by the Group to actions such as realising security, and / or loans where the borrower is greater than or equal to 90 days past due and the arrears amount is material; and
• other loans meeting NPE criteria as aligned with regulatory requirements”