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Banks' ratio of common equity tier 1 (CET1) rose further by 60bps to 13.6% in Q4 2015, driven by an increase of capital and a decline of RWAs (ratios are weighted average). The ratio of non-performing loans (NPL) was 5.8%, 10bps below Q3 2015. Notwithstanding the improvement, credit quality and the level of legacy assets remain a concern. The coverage ratio for NPLs improved by 10bps to 43.8% in Q4 2015 (compared to the former quarter). Dispersion is still wide among countries (between 30% and over 65%), but narrowed among banks of different size class (between 42% and 45%).
The average return on equity (RoE) was 4.7% in Q4 2015, 1.7 percentage points lower than in Q3 2015, but higher than 2014 level (3.5%). The average return on assets (RoA) was 0.29% in Q4 2015 (0.20% per year end 2014 and 0.38% in Q3 2015).
The loan-to-deposit ratio decreased to 120.9%. It was 2.3 percentage points below Q3 2015 level. The asset encumbrance ratio increased again to 25.6% in Q4 2015 (25.3% in the former quarter) and showed an even further widening dispersion among countries.
The figures covered in the European Banking Authority’s(EBA) Risk Dashboard are based on a sample of 154 banks at the highest level of consolidation, while country aggregates may also include large subsidiaries.
EBA_Interactive Dashboard - Q4 2015