EBA risk assessment warns about the impact of a deteriorating macroeconomic environment

09 December 2022

  • While bank profitability has improved, it remains uncertain how it will evolve amid lower GDP growth and rising interest rates.
  • Bank capital and liquidity ratios remain high but have declined slightly year on year. The average common equity tier 1 (CET1) ratio has reached 15.0% while the liquidity coverage ratio (LCR) 165.1%.
  • Despite low non-performing loans (NPL) volumes, banks classify 9.5% of loans in stage 2, the highest level since 2018 when reporting was initiated.
  • Credit spreads have widened for bank debt instruments.
  • ICT-related risks remain high.
The European Banking Authority (EBA) published today its annual risk assessment of the European banking system. The report is accompanied by the publication of the 2022 EU-wide transparency exercise, which provides detailed information, in a comparable and accessible format, for 122 banks across 26 EEA / EU countries. Banks should prepare for a likely deterioration in asset quality and strengthen their screening systems and controls to ensure a strict compliance with sanctions to prevent legal and reputational risks.  

Overview of key figures

 

CET1 ratio (transitional)

CET1 ratio (fully loaded)

Leverage ratio (fully phased-in)

Liquidity coverage ratio

NPL ratio

Share of Stage 2 loans

RoE

Q2 2022

15.2%

15.0%

5.2%

165.1%

1.8%

9.5%

7.8%

Q2 2021

15.8%

15.5%

5.7%

174.5%

2.3%

8.8%

7.4%

 

Notes to editors

The transparency exercise is part of the EBA's ongoing efforts to foster transparency and market discipline in the EU financial market, and complements banks' own Pillar 3 disclosures, as laid down in the EU Capital Requirements Directive (CRD). Along with the dataset (over 1.2 million data points, with on average more than 10,000 data points per bank), the EBA also provides a wide range of interactive tools that allow users to compare and visualise data across time and on a country and a bank-by-bank level.

The exercise results are based on the supervisory data submitted to the EBA via the European Centralised Infrastructure of Data (EUCLID) platform. It is the platform and data infrastructure developed and used by the EBA to gather and analyse regulatory data from a wide range of financial institutions. It covers supervisory, resolution, remuneration and payments data. Thanks to EUCLID, the public will be able to gain a wider access to EU banking and financial data. 

 

 

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Franca Rosa Congiu

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