ESRB Publishes Risk Dashboard for June 2018

The dashboard reveals that the banking sector resilience continued to strengthen in the first quarter of 2018. The median common equity tier 1 to risk‐weighted assets ratio increased to 15.8% in the first quarter of 2018, up from 14.7% in the first quarter of 2017. Moreover, the median ratio of non‐performing loans to total gross loans and advances continued its downward trend, reaching 3.1% in the first quarter of 2018. Ongoing supervisory and regulatory work, as well as the improved economic environment, contributed to easing the severity of vulnerabilities in the European banking sector.

Solvency and profitability indicators suggest that the EU insurance sector is performing well overall. The median Solvency Capital Requirement ratio rose to over 200% in the fourth quarter of 2017, continuing the gradual upward trend from below 190% in the fourth quarter of 2016. This slight improvement was driven partly by the moderate increase in the risk‐free rates, with the ten‐year EIOPA risk‐free rate, for example, rising from 0.571% in the fourth quarter of 2016 to 0.802% in the fourth quarter of 2017. As the majority of European Economic Area insurance companies have a combined ratio below 100%, this would also suggest that underwriting performance for non‐life insurance portfolios has, on average, been healthy.

The ESRB risk dashboard is published quarterly, one week after its adoption by the General Board. The risk dashboard should not be considered to be a policy statement on systemic risks. Additional indicators that support systemic risk assessment in the EU financial system are available in the macro-prudential database maintained by ECB.

Related Links

• Risk Dashboard, June 2018 (PDF)
• Overview Note (PDF)
• Annex 1 (PDF)
• Annex 2 (PDF)

Keywords: Europe, EU, Banking, Insurance, Securities, PMI, Risk Dashboard, Systemic Risk, ESRB