EBA updates its risk dashboard for EU banking sector

11 December 2014

The European Banking Authority (EBA) published today the periodical update to its risk dashboard summarising the main risks and vulnerabilities in the banking sector in the European Union (EU) on the basis of the evolution of Key Risk Indicators (KRI) from 53 banks across the EU in the first and second quarter of 2014. This edition of the risk dashboard is the first to have own funds' positions and requirements data that is based on the supervisory reporting standards from COREP, the Common Reporting framework for financial institutions across the EU, and includes an annex on aggregate risk parameters that brings enhanced transparency on EU banks' and allows comparison across countries and geographical areas.
Data in this edition of the EBA dashboard confirms the positive trend in EU banks' capital positions, which reached the highest level since 2009 with a Common Equity Tier 1 (CET1) at 11.8 per cent in Q2 2014. This increase was driven by capital issuances ahead of the stress test and asset quality review exercises. The levels of non-performing loans remained stable, but still at very high levels, prompting the need for thorough assessments of credit quality, accompanied by consistent transparency.
Profitability levels have been volatile. Continually subdued, returns keep on being severely affected by the clean-up of some major banks' balance sheets, as well as by litigation costs. Dispersion across banks has been narrowing during the first half of 2014.
The EBA dashboard also shows that shifts in balance sheets' structure continue, while in the second quarter of 2014, weighted average of debt-to-equity ratio fell further. Loan-to-deposit ratio remained fairly unchanged during the first half of 2014.
The EBA risk dashboard is part of the regular risk assessment conducted by the EBA and complements the semi-annual Risk Assessment Report. It is based on Q2 2014 data and takes into consideration the evolution of a set of Key Risk Indicators from 53 EU banks that the EBA has been collecting on a quarterly basis since 2009.
This update includes an annex on aggregate risk parameters taken from the 2014 Stress Test Exercise. This is part of the efforts to enhance data availability on EU banks and follows the work of the EBA on the consistency of RWAs.