European Central Bank statistics on banking supervision for the fourth quarter of 2021

The preparation of quarterly reports of the European Central Bank (ECB) is based on relevant performance reports of European banking institutions, based on which, parameters and statistics are formed. Insight into this analysis gives us a clearer picture of the European banking system. Having this in mind, ECB statistics lead to greater certainty in negative effects and risks, and contributes in creating a strategy for overcoming problems at European level.

In April 2022, the European Central Bank (ECB) has published the supervisory banking statistics for the fourth quarter of 2021. The conclusions that can be drawn from the above Report, are as follows.

The cumulative coefficient of capital requirements regarding banks, which are designated as significant financial institutions, that is those banks that are directly supervisioned by ECB, remained stable in the last quarter of 2021, so the rate of these ratios was 19.48%.

The share of non-performing loans (NPL) in the total level of loans decreased to 2.06% (down from 2.17% in the previous quarter). With this decline, the share of NPLs is at a new historical minimum since the beginning of supervisory statistics. Namely, the balance of non-performin loans fell from EUR 401 billion to EUR 374 billion, as it was in the third quarter of 2021. At the European level, the average ratio of non-performing loans ranged from 0.58% in Luxembourg to 7.04% in Greece.

The Return on Equity rate (RoE), as one of the most important indicators of profitability, at the end of the fourth quarter of 2021 decreased from 7.19%, as it was in the previous quarter to 6.72%. However, compared to the Return on Equity rate rate in the last quarter of 2020, it has grown up to 1.53%.

While operating income, as in the previous quarter, remained stable (up EUR 1 billion from the previous quarter), administrative costs and depreciation increased.

The total number of credits and loans which are subject to COVID-19 related measures in the fourth quarter was further reduced by EUR 50 bilion compared to the previous quarter, more precisely down to EUR 444 bilion. The decrease was caused by credits and loans which are subjected to the moratorium that has not expired yet, in accordance with the guidelines of the European Banking Authority (EBA), which fell from EUR 44 billion from the previous quarter to EUR 6 billion.

By analyzing all of the above, we can make a conclusion that with minor deviations, the general stability of the banking system has been established. The ECB’s regular statistical reports have significantly made access for new strategies establishment easier, all for the sake of identifying potential risks and enabling more successful actions against the economy crisis. In any case, in times of war, the European Central Bank’s statistical reports about banking supervision, are going to become even more important.