The European Banking Authority (EBA) today released the Spring 2025 edition of its risk assessment report (RAR), which also analyses the funding plans of banks within the European Union/European Economic Area (EU/EEA). This report is supplemented by the Spring Risk Assessment Questionnaire (RAQ).
Key findings from the EBA risk assessment
- As of the end of 2024, banks maintained a robust capital base, while profits were at historically high levels. Increased uncertainty and financial market volatility could pose challenges for the sustainability of these.
- Liquidity levels remained substantial and significantly exceeded minimum standards, although potential risks may emerge due to heightened volatility.
- EU/EEA banks’ credit risks could rise due to their exposure to sectors affected by tariffs or supply chain disruptions stemming from geopolitical events.
- Operational risks are on the rise, particularly in relation to cyber threats and a surge in fraudulent activities.
- The funding plans of EU/EEA banks indicate a focus on leveraging their deposit base and issuing secured debt to facilitate strong asset growth.
- A significant portion of EU/EEA banks’ exposures could be affected by both transitional and physical climate-related risks, although there is considerable variation among different banks and countries.
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