Non-performing assets are loans made by a bank or finance company on which repayments or interest payments are late.
If they are not serviced for some time banks usually treat assets as non-performing. If payments are late for a short time a loan is classified as past due. Once a payment becomes really late (usually 90 days) the loan is classified as non-performing.
A high level of non-performing assets may be a sign of problems. However this needs to be looked at in the context of the type of lending being done. Some banks lend to higher risk customers and therefore tend to have a higher proportion of non-performing debt but will make up for this by charging borrowers higher rates of interest. A mortgage lender will almost certainly have lower non-performing assets than a credit card specialist, but the latter will have higher spreads and may well make a bigger profit on the same assets even if it eventually has to write off the non-performing loans.