EBA publishes its quarterly Risk Dashboard. Banks’ capital and liquidity ratios remain strong and profitability continues to increase.

EBA publishes its Risk Dashboard together with the first edition of the RDB on minimum requirement for own funds and eligible liabilities (MREL). Volatility in EU/EEA banks’ equity and debt has been strongly affected by Silicon Valley Bank (SVB) and Credit Suisse related events, although direct exposures of EU/EEA banks towards these banks were limited according to indications from supervisory reporting as of Q4 2022.

The European Banking Authority (EBA) today published its quarterly Risk Dashboard (RDB) together with the first edition of the RDB on minimum requirement for own funds and eligible liabilities (MREL). Volatility in EU/EEA banks’ equity and debt has been strongly affected by Silicon Valley Bank (SVB) and Credit Suisse related events, although direct exposures of EU/EEA banks towards these banks were limited according to indications from supervisory reporting as of Q4 2022. Banks’ capital and liquidity ratios remain strong and profitability continues to increase.

• Banks increased their capital ratios and maintained high liquidity ratios in Q4 2022.
• The average Common Equity Tier 1 (CET1) ratio increased to 15.3% from 14.8% in the previous quarter on a fully loaded basis.
• The average Liquidity Coverage Ratio (LCR) reached 164.7% (vs. 162.4% in Q3 2022) while the average Net Stable Funding Ratio (NSFR) decreased slightly (125.8% in Q4 2022).
• EU/EEA banks have a diversified funding and liquidity profile. Going forward, banks need to prepare for the repayment of TLTRO for Euro area banks.
• Total assets declined in the fourth quarter by around 7%. The decline was driven by cash balances (-16%), presumably related to TLTRO repayments.
• Household exposures have remained roughly stable, whereas loans to non-financial corporates (NFC) rose by nearly 1% QoQ, supported by commercial real estate exposures (CRE; +2.3% QoQ).
• Debt securities represent 11.6% of total assets (around EUR 3.1tn). Of these securities, around EUR 1.5tn are booked at amortised cost.
• The non-performing loan (NPL) ratio remained stable at 1.8%. While the share of stage2 loans decreased slightly to 9.4% in Q4 2022 from 9.6% for Q3 2022, cost of risk increased slightly from 0.43% to 0.46% during the same period.
• Average return on equity (RoE) increased materially from 7.3% in Q3 2022 to 8% in Q4 2022, not least driven by the rise in net interest margins (NIM).

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