Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Own funds
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions
Disclose name of institution / entity:
Type of submitter:
Competent authority
Subject Matter:
Inclusion of interim profits in CET1 on consolidated basis

1. Could the competent authority grant a permission for including interim profits on consolidated level without granting such permission on solo level?

2. How should the institution calculate the pay-out ratio of dividends calculating foreseeable dividends according to Article 2(7) of RTS 241/2014 while applying for inclusion of interim profits on consolidated level?


Background on the question:

1. An institution has applied for inclusion of interim profits on the basis of Article 26(2) CRR only on consolidated level without applying for inclusion of interim profits on solo level at the same time. It raises some concerns that interim profits, which do not fulfil the conditions of the CRR (in the absence of the competent authority`s permission to include profits) on the solo level would contribute to the CET1 capital on the group level. Additionally, the question arises if from a formal point of view the institution would be able to distribute interim profits, which would be not part of the CET1 capital on solo basis, but would be part of the CET1 on consolidated level.

2. According to the Article 26(2) CRR, an institution can include interim profits in CET1 capital before it has taken a formal decision confirming the final profit or loss of the year if these profits are verified, any foreseeable charges or dividends are deducted from these profits and the competent authority’s permission is granted. On the basis of Article 2(7) of RTS 241/2014, if the institution’s management body has neither formally taken a decision nor proposed a decision regarding the amount of dividends to be distributed nor an approved dividend policy, the  amount of foreseeable dividends should be based on the dividend pay-out ratio, determined  as the highest of  either the average dividend pay-out ratio over three recent years or the dividend pay-out ratio of the last year. The question is, how to calculate dividend the pay-out ratio on the consolidated level on the basis of dividend paid in recent years, if the dividends always have been paid on the individual basis. In theory, such ratios could be calculated on consolidated basis. However, there would be no formal dividend policy on the consolidated level as there are no consolidated dividends.


Date of submission:
Published as Final Q&A:
EBA Answer:
  1. The permission to include interim profits within CET1 capital under the conditions as set out in Article 26(2) of Regulation (EU) No 575/2013 (CRR) may be granted by competent authorities at several levels of consolidation within a group, and the respective decisions made by competent authorities are not linked. The permission may be granted by the consolidating supervisor in the absence of permission granted at the individual level, especially in the case where an institution is supervised only at the consolidated level due to a derogation following Article 7 CRR.
  2. When determining the dividend pay-out ratio according to Article 2(7) of Regulation (EU) 241/2014 at consolidated level, foreseeable dividends at the individual level should be taken into account, as dividends are determined and paid on the individual basis.


Final Q&A
Note to Q&A:
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.