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The European Banking Authority (EBA) Risk Dashboard is part of the regular risk assessment conducted by the EBA and complements the annual Risk Assessment Report. The Methodological guide covers a wider set of indicators than those included in the Risk Dashboard. It is a tool developed to provide clear indications to all interested users on the way risk indicators are computed.
Data in this Risk Dashboard shows a further improvement of banks' capital position for Q3 2015. The ratio of common equity tier 1 (CET1) is 13.0%, 20bps higher than in Q2 2015. The country dispersion remains wide but none of the countries has a CET1 ratio below 10%. In addition, the data illustrates that there has been further improvement in asset quality and the ratio of non-performing loans (NPL) has decreased by 10 basis points to 5.9%.
Nevertheless, the NPL ratio remains high and poses a significant concern for supervisors. Moreover, the decline of the NPL ratio remains uneven and the dispersion across countries is material.
Overall, the data shows that profitability is still low and the average return on equity (RoE) – not seasonally adjusted – decreased to 6.4% in Q3 2015, 40bps below Q2. Furthermore, for RoE country dispersion is wide too. The cost to income ratio stopped its improvement in the third quarter, and increased again to 59.9% (59.2% in the former quarter). The net interest margin remained stable at 1.6% in Q3 2015.
Additionally, the debt to equity ratio has been declining during the last quarters to 15.4 in Q3 2015. The asset encumbrance ratio was 26.6% (25.7% in the Q2) and showed a wide dispersion among countries, reflecting the funding mix as well as the level of central bank funding.