Rastko Jovanović • avg 31, 2022
European Central Bank supervisory banking statistics for the first quarter of 2022
The statistics of the European Central Bank (ECB) on banking supervision contain information on the operations of banks that are under the direct supervision of the ECB. The statistics are compiled on the basis of data reported by banks in the COREP and FINREP reports.
The statistical reports cover several aspects of European banking, and are key to understanding possible risks and dangers in the activities of banks supervised by the ECB.
In July 2022, the European Central Bank issued the Statistical Report on Banking Supervision for the first quarter of 2022 (Q1). In relation to the period analyzed in the previous quarterly reports, the existence of certain trends is evident.
The aggregate capital ratios of financial institutions under the supervision of the ECB in Q1 was 18.86%, which represents a decrease compared to the level from the last quarter of 2021 when it was 19.48%. However, at the state level, there is a large difference between the capital ratios, with the lowest ratio in Greece, at 12.39%, while the highest is in Estonia, at 26.44%.
The continuation of the decline in the share of bad NPL loans in the total amount of loans is clearly visible. In the Q1 period, their share is at 1.95%, which is the lowest level since the European Central Bank started issuing statistical reports on banking supervision. The continuation of the decline was partly caused by the decrease in the aggregate value of NPLs from 374 billion (as it was in the fourth quarter of 2021) to 369 billion. However, the share of NPL loans was also reduced by the increase in the total amount of loans and advances (from 18,138 billion in the previous quarter to 18,963 billion in Q1). At the state level, the share of NPLs ranged from 0.72% in Lithuania to 6.75% in Greece.
The Return on Equity rate also continued to decrease, it fell from 6.71% in 2021 to 5.98% in the first quarter of 2022. There was also an increase in operating income, as well as administrative expenses and depreciation.
The aggregate liquidity coverage ratio of banks was 167.46% in the first quarter of 2022, which is a decrease compared to the ratio from the fourth quarter of 2021, when it amounted to 173.49%.
The total amount of loans and credits affected by the measures against COVID-19 continued to fall and in the first quarter of 2022 amounted to 421 billion, which represents a decrease compared to their value in the last quarter of 2021, which amounted to 444 billion. As in the previous quarter, the reason for this is the reduction in the amount of loans and credits that are subject to the COVID-19 forbearance measures.
From the previous data, a conclusion can be drawn about the relative stability of the European banking system. However, since the next statistical report covering the second quarter of 2022 will be issued in October, a greater impact of the war in Ukraine and the accompanying sanctions on the European banking sector as a whole can be expected.