EBA: EU banking sector resilient despite risk stemming from interest rates changes

The European Banking Authority (EBA) today published its annual risk assessment of the European banking system. The Report is accompanied by the publication of the 2023 EU-wide transparency exercise, which provides detailed information, in a comparable and accessible format, for 123 banks from 26 countries across the European Union (EU) and the European Economic Area (EEA).

Highlights of the EBA risk assessment

• The EU banking sector has proven to be resilient in the aftermath of the banking turmoil in March.
• Capitalisation remains high with an average common equity tier 1 (CET1) ratio at its highest reported point (16%). Underlying profitability has supported banks’ payouts.
• Elevated interest rate levels have so far supported widening interest margins, but this might have reached its turning point.
• Asset quality remains robust, yet subdued economic growth and elevated interest rate levels create pockets of risks.
• Liquidity remains high but it started normalising from its pandemic highest levels.
• Market funding costs have increased in line with interest rates, yet deposits rates have remained comparatively low but might rise going forward.

Notes to editors

The transparency exercise is part of the EBA’s ongoing efforts to foster transparency and market discipline in the EU financial market, and complements banks’ own Pillar 3 disclosures, as laid down in the EU Capital Requirements Directive (CRD). Along with the dataset (over 1.2 million data points, with on average more than 10,000 data points per bank), the EBA also provides a wide range of interactive tools that allow users to compare and visualise data across time and on a country and a bank-by-bank level.

The exercise results are based on the supervisory data submitted to the EBA via the European Centralised Infrastructure of Data (EUCLID) platform. This platform has been developed by the EBA to gather and analyse regulatory data from a wide range of financial institutions. It covers supervisory, resolution, remuneration and payments data. Thanks to EUCLID, the public will be able to gain a wider access to EU banking and financial data.