Featured Product

    EBA Publishes Risk Dashboard for First Quarter of 2019

    July 04, 2019

    EBA published risk dashboard for the first quarter of 2019. The dashboard, which is on data as of the first quarter of 2019, summarizes the main risks and vulnerabilities in the banking sector in EU or European Economic Area. The risk dashboard includes, for the first time, IFRS 9 related data on asset quality and fair valued positions as well as information about the sovereign exposures of banks. EBA also published the results of its Risk Assessment Questionnaire (RAQ), which includes bank and market analyst expectations on future trends and developments.

    The dashboard is based on a sample of 150 banks, covering more than 80% of the EU banking sector (by total assets), and presents the following key results:

    • The capitalization of EU banks remains strong, with capital ratios being unchanged during the first quarter of the year. CET1 ratios—both fully loaded and transitional—remain unchanged at 14.5% and 14.7%, respectively. 
    • The improvement of asset quality slowed down. The ratio of non-performing loans (NPLs) declined to 3.1% from 3.2% in the previous quarter, but at a slower pace than in the earlier quarters. The decrease in NPL ratio was mainly supported by an increase of total loan volumes (3.4% growth quarter-over-quarter [QoQ]) and as such comes despite a very slight rise in NPLs.
    • In terms of funding and liquidity, EU banks did not show any major changes. The loan-to-deposit ratio for households and non-financial corporations continued its constantly decreasing trend to 116.8% (down from 117.0% in the previous quarter). The liquidity coverage ratio (LCR) continued its upward trend, now reaching 152.7%. The asset encumbrance ratio declined slightly, to now 27.6% compared to 28.0% in the previous quarter.

    Additionally, a semi-annual Risk Assessment Questionnaire survey was conducted among banks and market analysts in Spring 2019. For this edition, 62 banks and 18 market analysts submitted their answers. The Risk Assessment Questionnaire results reflected the low profitability of EU banks, which entails potential risks for the EU banking sector. According to the responses to the Risk Assessment Questionnaire, banks plan to further expand their corporate lending, especially in the small and medium enterprises (SME) segment, and their household exposures through mortgages and consumer lending. Almost half of the banks aim to fund their growth by increasing minimum requirement for own funds and eligible liabilities (MREL) and retail deposits. Furthermore, banks identified cyber risk and data security as main drivers for an increase in operational risk. Finally, on sustainable finance, which is included in the Risk Assessment Questionnaire for the first time, the answers show that a huge majority of the banks have developed or are planning to develop green products in their portfolios.

     

    Related Links

    Keywords: Europe, EU, Banking, Risk Dashboard, CET 1, Basel III, NPLs, LCR, Risk Assessment Questionnaire, MREL, Cyber Risk, Operational Risk, EBA

    Featured Experts
    Related Articles
    News

    HKMA Sets Out Regulatory Treatment for Personal Loan Guarantee Scheme

    HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.

    April 20, 2021 WebPage Regulatory News
    News

    ECB Completes Targeted Review of Internal Models of Banks

    ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.

    April 19, 2021 WebPage Regulatory News
    News

    PRA on Regulatory Treatment of Loans Under Mortgage Guarantee Scheme

    PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.

    April 19, 2021 WebPage Regulatory News
    News

    FCA Consults on Rules and Reporting Forms for Investment Firms Regime

    FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).

    April 19, 2021 WebPage Regulatory News
    News

    HMT and BoE Decide to Explore Central Bank Digital Currency in UK

    HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.

    April 19, 2021 WebPage Regulatory News
    News

    EIOPA Sets Out Expectations on Use of Climate Risk Scenarios in ORSA

    EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).

    April 19, 2021 WebPage Regulatory News
    News

    EC Sets Out Standards for MREL Reporting by Competent Authorities

    EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).

    April 16, 2021 WebPage Regulatory News
    News

    BCBS to Advance Work on Suptech, Climate Risk, and Basel Monitoring

    BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.

    April 16, 2021 WebPage Regulatory News
    News

    Bundesbank Updates AnaCredit Reporting Requirements

    Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.

    April 16, 2021 WebPage Regulatory News
    News

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6874