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

    BCBS Consults on Principles for Operational Risk and Resilience

    BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.

    August 06, 2020 WebPage Regulatory News
    News

    FSI Note Discusses Challenges Associated with COVID Relief Measures

    The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.

    August 06, 2020 WebPage Regulatory News
    News

    HKMA Announces Repayment Deferment Under Payment Holiday Scheme

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.

    August 05, 2020 WebPage Regulatory News
    News

    ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal

    The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.

    August 05, 2020 WebPage Regulatory News
    News

    MAS Announces Key Initiatives to Support Adoption of SORA

    MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.

    August 05, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    News

    PRA to Extend Temporary High Balance Coverage Amid COVID Crisis

    PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.

    August 04, 2020 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC

    EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.

    August 03, 2020 WebPage Regulatory News
    News

    EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10

    EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.

    August 03, 2020 WebPage Regulatory News
    News

    EC Sets Out Updated Technical Information for Solvency II Calculations

    EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.

    August 03, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5635