EBA Risk Dashboard Q4 2022

However, the direct exposure of EU/EEA banks to these institutions is limited based on supervisory reporting as of Q4 2022. EU/EEA banks maintain substantial capital and liquidity ratios, and their profitability grows.

• In Q4 2022, banks bolstered their capital ratios and sustained high liquidity ratios. On a fully loaded basis, the average Common Equity Tier 1 (CET1) ratio rose to 15.3% from the previous quarter's 14.8%. The average Liquidity Coverage Ratio (LCR) reached 164.7% (compared to 162.4% in Q3 2022), while the average Net Stable Funding Ratio (NSFR) experienced a slight decline, settling at 125.8% in Q4 2022. 
• EU/EEA banks possess diverse funding and liquidity profiles. Looking ahead, banks need to prepare for the repayment of Targeted Longer-Term Refinancing Operations (TLTRO) for Euro area banks. 
• In Q4, total assets declined approximately 7%, primarily driven by decreased cash balances (-16%), presumably due to TLTRO repayments.  
• Household exposures remained relatively stable, whereas loans to non-financial corporates (NFC) increased by nearly 1% quarter-on-quarter (QoQ), supported by commercial real estate exposures (CRE) rising by 2.3% QoQ. 
• Debt securities constitute 11.6% of total assets, amounting to around EUR 3.1 trillion. Of these securities, approximately EUR 1.5 trillion is booked at amortized cost. The non-performing loan (NPL) ratio remained steady at 1.8%. Although the share of stage 2 loans slightly decreased to 9.4% in Q4 2022 from 9.6% in Q3 2022, the cost of risk experienced a slight increase from 0.43% to 0.46% during the same period. 
• The average return on equity (RoE) saw a significant increase from 7.3% in Q3 2022 to 8% in Q4 2022, primarily driven by the rise in net interest margins (NIM). 

The figures included in the Risk Dashboard are based on a sample of 162 banks, covering more than 80% of the EU/EEA banking sector (by total assets) at the highest level of consolidation. At the same time, country aggregates also include significant subsidiaries (the list of banks can be found here).