Almost 20% of bank loans in Ireland are non-performing compared to an average of 7% across the euro zone, according to a report by the European Central Bank.
The study says the scale of the problem remains "high" and the banks have over €50bn of non-performing loans.
The figure excludes borrowings with an original value of €74bn which were transferred to Nama.
However, the report says Ireland has taken "comprehensive actions" to address the issues.
The study highlights a number of challenges for Ireland including the time lag to resolve problem loans.
It also says that if interest rates rise and economic conditions deteriorate as a result of Brexit it may pose a risk to reducing non-performing loans given the high levels of household indebtedness.
The ECB report says "the high volume of cases moving through the Irish judicial system and the timelines associated with the repossession process primarily for primary dwelling home mortgages are a key challenge for Irish banks and their ability to repossess."
The ECB says the domestic banking system is dominated by AIB, Bank of Ireland, Permanent TSB, Ulster Bank and KBC.
It says that since 2011 there have been intensive on-site inspections of banks to examine management of non-performing loans.
The ECB document is part of a stock taking exercise which has examined supervisory practices in eight countries, including Ireland.
The process is being led high level group which is chaired by Sharon Donnery who is Deputy Governor of the Central Bank in Ireland.
