EU banks better capitalised in 2015, but NPLs remain of concern

24 November 2015

The European Banking Authority (EBA) published today the outcome of its 2015 EU-wide transparency exercise and provided detailed bank-by-bank data on capital positions, risk exposure amounts and asset quality on 105 banks from 21 countries of the European Economic Area (EEA) as part of its ongoing commitment to enhancing transparency in the EU Banking sector. The data, which shows improvements in the resilience of the EU banking sector, is published at the highest level of consolidation, covering around 70% of total EU banking assets for the reference dates of 31 December 2014 and 30 June 2015. By disclosing these fully comparable figures in user friendly formats, the EBA aims to promote greater understanding of capital positions and exposures of the EU banking sector and foster market discipline in the Single Market.

Complementing the individual bank data, the EBA also published a report on the aggregate results of the exercise, summarised in the following table:


CET1 ratio (transitional)

Return on regulatory capital

Non-Performing Loans ratio

Coverage ratio of Non-Performing Loans

Leverage ratio

Sovereign exposures as a percentage of total leverage exposures














Reference date June 2015

See the 2015 EU-wide transparency exercise results page.

Piers Haben, Director of Oversight at the EBA explained: this transparency exercise, the EBA's fifth annual release of consistent bank by bank data, demonstrates an increasing resilience in the EU banking sector as capital levels have strengthened further. Nonetheless, EU banks will need to continue addressing the level of non-performing loans which remain a drag on profitability. Haben added that: the breadth of individual bank data, and the quality of the interactive tools available, is testimony to the EBA's efforts to enhance transparency, foster market discipline and reinforce investors' confidence.

In particular, the outcomes of this exercise show that, in general, EU banks have continued to strengthen their capital positions, mainly through raising additional equity and retaining earnings. This places them in a better position to increase lending to the real economy, as shown by a modest overall increase in exposures during 2015. The common equity tier 1 ratio (CET1) reached 12.8% as of June 2015, 11.8% on a fully loaded basis. Leverage ratios published here appear to have benefited from capital improvements in recent years with an EU aggregate ratio at 4.9% as of June 2015.

The quality of assets and the levels of profitability have also improved, albeit from a low base and remain a source of concern. Non-performing exposures, for the first time published following the EBA's harmonised definition[1], are close to 6% of total loans and advances across the EU, 10% if only non-financial corporations are considered, albeit with substantial variations across countries and banks. Profitability has improved through 2015 but remains weak by historical standards and relative to banks' estimated cost of equity. EU banks aggregate return on regulatory capital is 9.1% as of June 2015.

Finally, in terms of sovereign exposures, the data released today shows that a home bias when investing in sovereign debt is still relevant although gradually receding, as banks reported in June 2015 an increase in their holdings of non-domestic sovereign debt.

Note to the editors

  • The EBA has been conducting transparency exercises at EU-wide level on an annual basis since 2011, either linked to concurrent stress test exercises (2011 and 2014), to one-off exercises, (2011/2012 recapitalisation exercise), or specific solely transparency exercises where non-stressed actual data were published for a sample of banks, like in 2013 or the current 2015 exercise.
  • Transparency exercises, just like stress tests, are conducted by the EBA on a regular basis at EU-wide level and cover the largest EU banks at their highest level of consolidation. Both types of exercise aim at promoting market and supervisory discipline and providing transparency on banks' exposures, so as to address any uncertainties that may still remain. However, unlike stress tests, transparency exercises are purely disclosure exercises where only bank-by-bank data are published and no shocks are applied to the actual data.
  • For the first time, the 2015 transparency exercise is mainly based on existing supervisory reporting data which is submitted to the EBA on a regular basis, with the exception of data on sovereign exposures and leverage ratio which have been provided by banks ad hoc. This way, banks' reporting burden is minimised significantly, using already available data inputs that have undergone rigorous quality checks.

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