EBA Publishes Risk Dashboard of EU Banking Sector for Q1 2015

On June 4, 2015, the European Banking Authority (EBA) published its risk dashboard for the first quarter of 2015, summarizing the main risks and vulnerabilities in the banking sector, together with a press release.

The risk dashboard is based on data from the fourth quarter of 2014 and takes into consideration the evolution of a set of key risk indicators from 55 EU banks. It confirms, among other things, that:

  1. EU banks’ capital positions remained strong, with a common equity tier 1 (CET1) ratio of 12.1%. This is an increase of 50 basis points compared to 2013.
  2. The quality of banks’ loan portfolios remained weak but bottoming out.
  3. Profitability showed a mildly positive trend on a year over year comparison, but return on equity remained subdued and materially below banks’ average cost of equity.
  4. In 2014, at an EU level, deposits increased more than loans. The EU average loan‐to‐deposit ratio therefore decreased further in Q4 2014 to 108.6%, which is the lowest ratio since 2009.

The EBA risk dashboard is part of the regular risk assessment carried out by the EBA and complements the EBA’s risk assessment report.