NPL Servicing Market: Global Opportunity Analysis and Industry Forecast, 2023-2032

Rise in focus of banks to reduce non-performing loans (NPL) exposure has led to increased demand for credit management services in recent years.

WILMINGTON, DELAWARE, UNITED STATES, November 23, 2023 / -- NPL services are mainly used for collection of large unsecured corporate credit, which is characterized by a high level of specialization. The major purpose of NPL services is to ease the strain of unsecured loans on financial systems and ensure their professional management, which follows compliance with market principles used for maximizing recovery rates on such assets.

NPL management is considered a non-core activity for banks & corporate and requires a lot of resources, in terms of employees and capital. As a result, servicers play a key role to reduce this burden. Moreover, NPL disposals and outsourcing of management along with collection activities allow banks to manage their portfolio efficiently, thus achieving higher performances.

The global NPL servicing market is segmented on the basis of loan type, service type, enterprise size, end user, and region. Based on loan type, the market is divided into commercial real estate-backed loans, hospitality-related loans, residential mortgages, consumer unsecured loans, and others. In terms of service type, the NPL servicing market is categorized into due diligence & set-up, on boarding, asset & loan management, and others.

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New Advancements in the Global NPL Servicing Market

According to several studies, recovery of economic activities in the financing industry and implementation of regulatory policies to tackle bad debts have declined the euro area NPL ratio to 6% at the end of 2017. In addition, growth in adoption of advanced technologies among NPL servicers, along with growing trend of outsourcing of NPLs management activities among banks are the trends adopted by banks in recent years.

Surge in Moratorium On Loan Repayments and Higher Profits than Provision
Globally, banks have been facing several challenges in delay of loan payments since several decades. For instance, HDFC made provisions of more than USD 20 crore for coronavirus pandemic in initial months of 2020. In addition, ICICI Bank reported almost 30% of its book under moratorium of three months of 2020, leading to USD 2600 crore out of its USD 8700 crore book. Such increase in moratorium on loan repayments provide banks with higher profits and make their business profitable.

Key Benefits of the Report

This study presents analytical depiction of the global NPL servicing market forecast along with the current trends and future estimations to determine the imminent investment pockets.

The report presents information related to key drivers, restraints, and opportunities along with detailed analysis of the global NPL servicing market share.

The current market is quantitatively analyzed to highlight the market growth scenario.

Porter’s five forces analysis illustrates the potency of buyers & suppliers in the market.

The report provides a detailed NPL servicing market analysis based on the present and future competitive intensity of the market.

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COVID-19 Scenario Analysis

The impact of COVID-19 is expected to create financial and operational stress and might negatively affect servicers.

In particular, abilities to collect and manage funds, access portfolio data, coordinate with underlying debtors for solving liquidity issues, and produce investor reports is severely affected during this pandemic.

Organizations mostly dealing with higher requirements for loan servicers such as non-performing loan (NPL) securitizations and CMBS transactions, need to pay close attention to continue servicer performance.

It is expected that lenders and investors would be more loyal to their existing service providers as on-boarding a substitute servicer in the current environment can be extremely challenging.

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NPL Servicing Market Report Highlights

By Loan Type

Commercial Real Estate-Backed Loans
Hospitality-Related Loans
Residential Mortgages
Consumer Unsecured Loans

By Service Type

Due Diligence & Set-Up
On Boarding
Asset & Loan Management

By Enterprise Size

Large Enterprises
Small & Medium Enterprises (SMEs)

By End User

Credit Unions

By Region

North America (U.S., Canada, Mexico)
Europe (UK, Germany, France, Spain, Italy, Rest of Europe)
Asia-Pacific (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
LAMEA (Latin America, Middle East, Africa)

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