IMF – Global Financial Stability Report

The April 2019 Global Financial Stability Report (GFSR) finds that despite significant variability over the past two quarters, financial conditions remain accommodative. As a result, financial vulnerabilities have continued to build in the sovereign, corporate, and nonbank financial sectors in several systemically important countries, leading to elevated medium-term risks. The report attempts to provide a comprehensive assessment of these vulnerabilities while focusing specifically on corporate sector debt in advanced economies, the sovereign–financial sector nexus in the euro area.

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EBA publishes updated impact of the final Basel III reforms on EU banks

The European Banking Authority (EBA) published two reports, which measure the impact of implementing the final Basel III reforms and monitor the current implementation of liquidity measures in the EU. The EBA Basel III capital monitoring report includes a preliminary assessment of the impact of the Basel reform package on EU banks, assuming its full implementation.

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EBA updated Risk Dashboard shows that elevated NPLs and a high cost base pose a significant profitability challenge for EU banks

The European Banking Authority (EBA) a periodical update of its Risk Dashboard summarising the main risks and vulnerabilities in the EU banking sector by a set of Risk Indicators in Q3 2016. Together with the Risk Dashboard, the EBA published the results of a Risk Assessment Questionnaire, which was conducted among banks and market analysts between October and November this year.

Risk Dashboard

Dodd-Frank Act Stress Test 2016: Supervisory Stress Test Methodology and Results

The nation’s largest bank holding companies continue to build their capital levels and improve their credit quality, strengthening their ability to lend to households and businesses during a severe recession, according to the results of supervisory stress tests announced by the Federal Reserve Board on Thursday.

The most severe hypothetical scenario projects that loan losses at the 33 participating bank holding companies would total $385 billion during the nine quarters tested. The “severely adverse” scenario features a severe global recession with the domestic unemployment rate rising five percentage points, accompanied by a heightened period of financial stress, and negative yields for short-term U.S. Treasury securities.

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EBA updates on risk and vulnerabilities in EU banking sector

The European Banking Authority (EBA) published its eighth semi-annual report on Risks and Vulnerabilities in the EU banking sector. The report shows that EU banks have continued to strengthen their capital position and to improve asset quality. However, the level of non-performing exposures remains high and profitability is still weak. The report also analyses the exposures towards emerging market (EM) countries and non-bank financial intermediaries.
Throughout the first half of 2015, EU banks continued to strengthen their capital ratios, mainly due to retained earnings. Banks’ equity tier 1 (CET1) ratio was 12.5 % in June, 40bps higher than in December 2014(1). This improvement has been accompanied by a modest recovery of loans and increase in risk-weighted assets.
Asset quality improved although trends differ significantly across countries and banks. The ratio of impaired and past due loans to total loans decreased to 6.4 % in the first half of 2015, compared to 7 % at the end of 2014, and the coverage ratio increased. Banks’ expectation of further gradual improvements in asset quality depends on the progress of economic recovery, which in turn is strongly dependent on developments in emerging markets.