In accordance with the CRR, when assessing an obligor’s default, credit institutions shall take into consideration the materiality of the debt obligations past due, which is assessed against a set threshold. For this purpose, the MFSA has recently issued a Circular outlining the thresholds that credit institutions shall apply. The materiality threshold consists of two elements a) an absolute threshold (EUR 100 for retail exposures and EUR 500 for other exposures) and b) a relative threshold (1%). Credit institutions are expected to implement into their systems these thresholds and ensure that the default of an obligor is assessed, inter alia, against such thresholds. Thus, NPLs should reflect the new thresholds.