BNP Paribas reports that European Union (EU) manufacturing firms are entering the anticipated 2026 energy shock from Iran with historically low non-performing loan (NPL) ratios, indicating stronger financial health compared to 2022 [1]. During a hearing on 18 March 2026 before the Committee on Economic and Monetary Affairs of the European Parliament, Claudia Buch, Chair of the Supervisory Board of the European Central Bank, emphasized the stability of bank asset quality and NPL ratios, which serve as indirect indicators of the financial health of EU manufacturing corporations [1].
The article notes that in most EU countries, the manufacturing sector's NPL ratio is at a historically low level, with the highest ratios at the start of the observation period showing the sharpest declines [1]. Between Q2 2019 and Q4 2025, NPL ratios were reduced by more than half in the majority of cases, and any increases during this period were generally modest [1]. This decline suggests improved financial health and a greater initial ability for the manufacturing sector to withstand the energy shock linked to the 2026 war in Iran, compared to the situation during the 2022 war in Ukraine [1].
Despite this resilience, BNP Paribas cautions that policy support measures will likely be more limited due to budget constraints [1]. However, new orders related to defence, public infrastructure, and artificial intelligence are expected to provide additional sources of resilience. These factors, combined with the sector's robust financial health, could help limit the impact of the 2026 energy shock on business bankruptcies and unemployment [1].
CONCLUSION
BNP Paribas highlights the EU manufacturing sector's improved financial health and historically low NPL ratios as it faces the 2026 energy shock from Iran. While policy support may be constrained, resilience from defence, infrastructure, and AI orders could help mitigate negative impacts on bankruptcies and unemployment. Overall, the sector appears better positioned than during previous crises.