(8)Those two key risks are material. The aggregated ratios of NPEs both for significant and for less significant supervised entities have in general exhibited a sustained downward trend since the inception of the SSM. This trend was more pronounced for significant supervised entities and came to an end in 2024. In light of potentially resurgent NPE ratios, it is considered that, given satisfactory overall levels of capital and the ample time less significant supervised entities have recently had to make progress on the reduction and coverage of legacy NPEs on their own initiative, a harmonised supervisory approach of NCAs in relation to coverage of NPEs held by less significant institutions is proportionate to the supervisory objective of addressing the two key risks related to those NPEs, in order to strengthen the resilience of less significant supervised entities to potential adverse developments in the macroeconomic environment and associated deteriorations in credit quality.