Page 25 - EBA 2013.2869 Risk Assesment Report final proof4

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R I S K A S S E S S M E N T O F T H E E U R O P E A N B A N K I N G S Y S T E M
23
Further reflecting on the expectations of
exacerbated asset quality concerns for the
next 12 months, in the light of a deteriorat-
ing economic environment, a large majority
of the RAQ respondents expect deteriorating
quality of loan portfolios across most seg-
ments, but in particular in SME lending port-
folios, despite a slight decrease since June
2012, residential mortgages and commercial
mortgages.
In line with deteriorating asset quality, most
of the RAQ respondents referred that the im-
pairment provisions over the time horizon of
the next 12–18 months will remain at roughly
the same level (there was an increase from
29 % to 47 % who agreed or somewhat
agreed, from December 2012 to June 2013,
respectively). A significant level of RAQ re-
spondents, despite being less, still believe
the impairment provisions will increase
(there was a small decrease in the percent-
age of answers from 57 % in December 2012
to 44 % in June 2013). The number of RAQ re-
spondents who believe the impairment provi-
sions will decrease, has fallen considerably
reaching only 9 % in June 2013, compared to
14 % in June 2012.
The majority of the RAQ respondents men-
tioned that the overall composition of their
loan portfolios is relatively well balanced with
no material sector or exposure concentra-
tion. The trends in impaired loans are driven
0 %
20 %
40 %
60 %
80 %
Based on your view on future trends in credit quality and
impairment levels for your bank, impairment provisions over the
time horizon of the next 12-18 months:
a. Will increase
b. Will remain at roughly the same level
c. Will decrease
Jun 2013 — Agree
or somewhat agree
Dec 2012 — Agree
or somewhat agree
Jun 2012 — Agree
or somewhat agree
Figure 15: Expectations for impairments (
source:
RAQ)
The length of the bars shows the percentage of respondents who agreed or somewhat agreed with the statement on the y-axis.
0 %
20 %
40 %
60 %
80 %
100 %
Moves in the levels of impairment provisions would
occur primarily in:
a. Specific credit sectors:
 i. Mortgages
 ii. RE developers
 iii. SME loans
 iv. Large corporate
v. Particular sub-sectors (e.g., shipping)
b. Specific geographies
Jun 2012 — Agree
or somewhat agree
Dec 2012 — Agree
or somewhat agree
The length of the bars shows the percentage of respondents who agreed or somewhat agreed with the statement on the y-axis.
Figure 16: Drivers of impaired loans trends (
source:
RAQ)