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

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for Third Quarter of 2020

    EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Finalizes Guide on Supervisory Approach to Bank Consolidation

    ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.

    January 12, 2021 WebPage Regulatory News
    News

    SRB Chair Outlines Work Priorities for 2021

    The SRB Chair Elke König published an article setting out work priorities for 2021.

    January 11, 2021 WebPage Regulatory News
    News

    FDIC Selects Companies to Compete in Final Phase of Tech Sprint

    FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.

    January 11, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6417