EBA Risk Assessment Warns About The Impact Of A Deteriorating Macroeconomic Environment

• While bank profitability has improved, it remains uncertain how it will evolve amid lower GDP growth and rising interest rates.
• Bank capital and liquidity ratios remain high but have declined slightly year on year. The average common equity tier 1 (CET1) ratio has reached 15.0% while the liquidity coverage ratio (LCR) 165.1%.
• Despite low non-performing loans (NPL) volumes, banks classify 9.5% of loans in stage 2, the highest level since 2018 when reporting was initiated.
• Credit spreads have widened for bank debt instruments.
• ICT-related risks remain high.

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