The figure is a measure of dispersion, not Italy’s bad-loan rate. It is the weighted standard deviation across deposit-taking banks in the share of loans classified as nonperforming—loans that are overdue or otherwise unlikely to be fully repaid. A higher reading means those ratios differ more from bank to bank, with larger institutions carrying more weight in the calculation.
The latest reading sits well outside the series’ previous range. Every earlier observation since Q2/2022 was between 1.87 percentage points in Q4/2023 and 2.44 in Q4/2024. That makes Q4/2025 the highest reading in the available history, although the record only begins in Q2/2022.
Italy also stood above the Q4/2025 peer average of 2.76 and median of 1.89 for the same measure, ranking fourth among 16 countries. The practical concern is that a national average can conceal pockets of weaker loan quality: supervisors may need to look more closely at individual banks’ provisions, capital buffers and borrower exposures. But this statistic alone cannot show whether the typical Italian bank’s loan book deteriorated, or whether troubled loans became more common across the economy.
The Bank of Italy reported that the banking system became more concentrated in 2025 as mergers were completed. That complicates interpretation because a weighted, institution-level measure can change when banks’ sizes and the composition of the sector change, as well as when their underlying loan performance diverges. The report does not establish that mergers explain this particular jump, so the result is best read as a prompt for bank-level scrutiny rather than evidence of broad banking distress.