E U R O P E A N B A N K I N G A U T H O R I T Y
EU banks on average have continued to
strengthen their capital position.
ed average common equity tier 1 (CET1) ra-
tio was 12.5 % in June, 40 basis points (bps)
higher than in December 2014. The strength-
ening of EU banks’ capital position continues
to be driven more by an increase in capital
rather than decline of the denominator. Dur-
ing the first half of 2015 the amount of CET1
capital grew by approximately 6.1 %. In the
same period, risk‑weighted assets (RWAs)
increased by approximately 2.5 % (
The first half of 2015 confirmed modest
loan growth in the EU banking sector.
set volumes, including loans, have continued
a trend that had already started last year.
Loans are growing at a faster pace than as-
sets (3.6 % versus 1.4 %, both YtD).
EU banks show significant direct exposures
to non‑bank financial intermediaries.
cording to data collected from 184 institutions
(169 banks and 15 investment firms) the expo-
sure is about EUR 1 trillion. The data shows
that banks’ average individual exposure to
non‑money market funds is around 29 % and
to UCITS money market funds around 6 % of
their eligible capital after credit risk mitiga-
tion and large exposures exemptions.
EU banks’ exposure towards emerging mar-
ket (EM) countries was about EUR 2.3 trillion
in June 2015.
Further depreciation of their
currencies could have a direct negative im-
pact on EU banks’ exposures, by triggering
defaults and through negative effects on rev-
enue from business with clients in EM coun-
tries, as well as indirect effects through, for
example, commodity exposures.
) The sample of banks in this report is smaller compared
to the one used in the EBA’s 2015 Transparency Exercise.
Banks saw further improvements in asset
quality, though impairment ratios remain
The ratio of impaired and past due
(> 90 days) loans to total loans decreased to
6.4 % in the first half of 2015 compared to 7 %
at the end of 2014. Trends in asset quality dif-
fer significantly among countries and banks.
Banks’ expectation of further gradual im-
provements in asset quality strongly depends
on the further economic recovery, including
potentially negative impacts from develop-
ments in China and other EM economies.
Coverage ratios have increased in the first
half of the year.
The effect was driven by
a reduction in the total impaired gross loans.
Levels of loan provisions are likely to undergo
changes in the future due to the implementa-
tion of IFRS 9.
Volatility in banks’ funding spreads demon-
strates an overall fragile state of financial
Except for periods of heightened
general market stress — mainly during the
peaks of the Greek crisis — no major con-
straints could be observed in the issuance
activity for secured and unsecured instru-
ments. In contrast to these instruments,
issuance volumes of subordinated funding
were below the levels of the same period in
the previous 3 years.
Even at the peak of the Greek crisis no major
volatility of customer deposit volumes could
be observed outside Greece.
est rates for deposits have been at long‑time
lows, banks have even been able to increase
volumes of customer deposits.