The ratio of nonperforming loans (NPL) to total gross loans is a measure of the health of the banking system. A bank loan can be classified as nonperforming when payments of principal and interest are 90 days or more past due, or when future payments are not expected to be received in full. The share of NPLs has increased rapidly in several countries since the 2008 financial crisis. Of the twenty countries with the highest NPL ratio in 2017 all but two (Afghanistan and Vanuatu) were located in Europe and Central Asia or in Sub-Saharan Africa and include economies at all income levels, high, middle, and low.
In Europe, the share of NPLs out of total loans in Ukraine grew from 4 percent in 2008 to almost 55 percent in 2017. Some European high-income economies were also particularly hard hit. In San Marino the NPL share expanded from 7 percent in 2009 to 49 percent in 2017, whereas in Greece it increased from approximately 5 to 46 percent between 2008 and 2017, and in Cyprus it increased from 4 to 40 percent over the same period, although the latest data shows an improvement since 2016. Equatorial Guinea, Chad, the Central African Republic, Ghana, Moldova, and Vanuatu all had NPL ratios of over 15 percent, which is more than four times the global median.