(Finance) – European banks remain highly profitable, well capitalized and with robust liquidity, although they expect a deterioration in credit quality due to the high interest rates weighing on debtors. This is what emerges from Third Quarter 2023 Risk Dashboard and from risk assessment questionnaire published by Eba, the European Banking Authority. Banks in the Eurozone and the European Economic Area (EEA) – we read in the report – have a “robust” capitalisation, with a fully loaded Cet1 on average at 15.8%, 10 basis points below the historical high of the quarter previous but 100 basis points above September 2022 levels.
“High levels” also for the liquidity indicatorsdespite a “slight” reduction, with funding conditions on the market that “remain benevolent” and have allowed banks to issue, until November 2023, more debt than in 2022. The tightening of lending standards observed throughout the eurozone have not yet led to a reduction in loans to businesses and families even if their growth “remains weak” and banks have said they are “reluctant to increase their exposure”.
There asset quality remains “robust” even if exposures to real estate, both residential and commercial, appear “more vulnerable”, with a greater percentage of banks, compared to the previous survey, “expecting a deterioration of these portfolios”.