EBA Updated its Risk Dashboard for 2Q 2017
EBA published an update of its Risk Dashboard for the second quarter of 2017. The dashboard summarizes the key risks and vulnerabilities in the EU banking sector through a set of risk indicators. The figures included in the Risk Dashboard are based on a sample of 152 banks, covering more than 80% of the EU banking sector (by total assets), at the highest level of consolidation, while country aggregates may also include large subsidiaries. The dashboard shows that progress is positive, but risks remain heightened on asset quality and sustainable profitability.
The risk dashboard shows slight improvement in the capital level of EU banks but nonperforming loans (NPLs) still affect the profitability of banks. In the second quarter of 2017, the common equity tier 1 ratio (CET1 ratio) reached a new peak since the fourth quarter of 2014, increasing from 14.1% in the first quarter of 2017 to 14.3% in the second quarter of 2017, with all EU countries experiencing an average ratio above 10%. However, this outcome was driven by a reduction of the denominator, with banks decreasing their risk exposure amounts (by EUR 195 billion), particularly for credit risk, also in connection with the liquidation or restructuring of some intermediaries. The quality of banks' loan portfolios continued improving, although the slow progress and wider dispersion among countries remained a concern. The NPLs ratio confirmed its downward trend of the previous quarters, decreasing by 30 basis points to 4.5% (Q2 2017) and reaching its lowest level since the fourth quarter of 2014.
Related Links
Keywords: Europe, EU, Banking, Risk Dashboard, NPLs, CET1, EBA
Previous Article
EIOPA Publishes Opinion on Supervisory Assessment of Internal ModelsRelated Articles
BCBS Amends Guidelines on Sound Management of AML/CFT Risks
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
US Agencies Finalize Amendments to Swap Margin Rule
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
PRA Letter Sets Expectations on Approach to Managing Climate Risks
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS Publishes List of Internationally Active Insurance Groups
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB Consults on Supervisory Approach to Consolidation in Banking
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
IAIS on Package for 2020 Data Collection on ICS and Aggregation Method
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.
