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The data, which shows improvements in the resilience of the EU banking sector, is published at the highest level of consolidation, covering around 70% of total EU banking assets for the reference dates of 31 December 2014 and 30 June 2015. By disclosing these fully comparable figures in user friendly formats, the European Banking Authority (EBA) aims to promote greater understanding of capital positions and exposures of the EU banking sector and foster market discipline in the Single Market.
Piers Haben, Director of Oversight at the EBA explained: this transparency exercise, the EBA's fifth annual release of consistent bank by bank data, demonstrates an increasing resilience in the EU banking sector as capital levels have strengthened further. Nonetheless, EU banks will need to continue addressing the level of non-performing loans which remain a drag on profitability. Haben added that: the breadth of individual bank data, and the quality of the interactive tools available, is testimony to the EBA's efforts to enhance transparency, foster market discipline and reinforce investors' confidence.
In particular, the outcomes of this exercise show that, in general, EU banks have continued to strengthen their capital positions, mainly through raising additional equity and retaining earnings. This places them in a better position to increase lending to the real economy, as shown by a modest overall increase in exposures during 2015. The common equity tier 1 ratio (CET1) reached 12.8% as of June 2015, 11.8% on a fully loaded basis. Leverage ratios published here appear to have benefited from capital improvements in recent years with an EU aggregate ratio at 4.9% as of June 2015.
The quality of assets and the levels of profitability have also improved, albeit from a low base and remain a source of concern. Non-performing exposures, for the first time published following the EBA's harmonised definition, are close to 6% of total loans and advances across the EU, 10% if only non-financial corporations are considered, albeit with substantial variations across countries and banks. Profitability has improved through 2015 but remains weak by historical standards and relative to banks' estimated cost of equity. EU banks aggregate return on regulatory capital is 9.1% as of June 2015.
Finally, in terms of sovereign exposures, the data released today shows that a home bias when investing in sovereign debt is still relevant although gradually receding, as banks reported in June 2015 an increase in their holdings of non-domestic sovereign debt.
2015 EU-wide Transparency Exercise Report