The European Banking Authority (EBA) today published its Q1 2025 Risk Dashboard (RDB), which discloses aggregated statistical information for the largest EU/EEA credit institutions.
- The common equity tier 1 (CET1) ratio for EU/EEA banks was reported at 16.2%, remaining stable compared to the previous quarter. Risk-weighted assets totalled EUR 9.9 trillion. The relevance of Operational risk increased and now comprises 12.9% of total risk-weighted assets (RWAs).
- EU/EEA banks reported total assets of EUR 29 trillion, representing a 2.7% increase from the previous quarter. This change was mainly due to a rise in debt securities, which made up 14.6% of total assets compared to 13.7% in Q4 2024. Cash balances also increased slightly on a quarter-over-quarter basis, totalling 10.9% of total assets. Loans to customers (households and non-financial corporates) grew by close to 1%. These were particularly driven by mortgage loans in households and corporate loans in small and medium enterprises (SMEs).
- EU/EEA banks reported non-performing loans (NPLs) totalling EUR 377.8 billion, consistent with the prior quarter's figures. Stage 2 loans increased only slightly, resulting in their proportion of total loans declining by 20 basis points to 9.5% in Q1 2025. Despite this positive trend, the cost of risk (CoR) rose to 57 basis points, which is considerably higher than the average of approximately 48 basis points since 2021, and represents the highest level observed since 2021. Yet, data depicts some cyclicality with substantially higher CoR levels in Q1.
- EU/EEA banks recorded a return on equity (RoE) of 10.5% in the first quarter of 2025, which was 10 basis points lower than the same period in 2024. The return on assets remained stable at 0.73% in Q1 2025. Banks' profitability remained stable despite a reduction in net interest margin (NIM), which decreased by 5 basis points to 1.6% from the previous quarter. This pattern continued for another quarter, with NIM declining by 8 basis points compared to March 2024. The effect on net interest income (-1.3% YoY) was balanced by asset growth and an increase in net fee and commission income (NFCI), which grew by 6% YoY.
- The liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) both declined in the first quarter, reaching 159.5% (down from 163.4% in Q4) and 126.9% (compared to 127.2% in Q4), respectively. The loan-to-deposit ratio for households and non-financial corporations (NFCs) saw a slight recovery from its multi-year low recorded in the previous quarter, registering 106.3% in Q1 2025 versus 104.8% in Q4 2024, as deposits from households and NFCs decreased marginally by 0.5% over the quarter. In contrast, other customer deposits which also include deposits from non-bank financial institutions (NBFIs) increased by 9.4% accounting for 12.7% of total liabilities of the banks
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