2007年-ECB欧洲央行_EU_banking_sector_stability_84页_1mb

EU BANKING SECTOR STABILITY – NOVEMBER 2007 SUMMARY

Core Content

This report provides an assessment of the financial condition and stability of the EU banking sector in 2006 and the first half of 2007, and discusses the impact of the recent financial market turmoil starting in July and August 2007. It also outlines the main risks and vulnerabilities facing the sector, including credit, market, and liquidity risks, and evaluates the sector's ability to withstand shocks.

Main Points

1. EU Banks' Performance in 2006 and First Half of 2007

• Profitability Improved Further:

  • Return on equity (ROE) increased across the EU banking sector.
  • Large banks saw a significant rise in ROE, while small banks, especially those in non-IFRS countries, experienced a decline or stagnation.
  • IFRS-compliant banks had an average ROE of just below 19%, while non-IFRS banks had an average of almost 16%.
  • ROE levels for large IFRS banks reached just above 20%, while small IFRS banks had around 5%, and small non-IFRS banks had around 5% as well.
  • The shift in ROE distribution shows that a significant portion of the EU banking system achieved ROE levels above 20% in 2006, up from less than 30% the previous year.

• Costs Remained Controlled:

  • Operating costs were well-contained for all EU banks in 2006.
  • For small and medium-sized banks, staff costs as a share of total assets decreased.
  • Cost-to-income ratios improved across all types of banks, with IFRS banks averaging around 57% and non-IFRS banks around 52%.
  • Country-level cost-to-income ratios varied, with some reaching as low as 30%, indicating efficient cost management.

• Operating Income Slight Increase:

  • Operating income increased slightly as a percentage of total assets for EU domestic banks.
  • IFRS banks had an operating income of 2.47% of total assets, while non-IFRS banks had 2.09%.
  • This suggests that banks' income growth was broad-based, supported by both interest and non-interest income streams.

• Solvency and Liquidity:

  • EU banks remained well-capitalised with minimal changes in Tier 1 and total capital ratios.
  • Solvency ratios were adequate to absorb unexpected losses.
  • However, liquidity positions slightly weakened, which could be attributed to increased reliance on non-deposit funding sources.

• Credit Lines:

  • Off-balance sheet items such as credit lines, contingent liabilities, and other commitments represented a significant portion of some EU banking sectors' balance sheets.
  • These items grew steadily since 2002 and are of particular importance for large EU banks.

2. Recent Market Turmoil (July–August 2007)

• The financial market turmoil originated from the sub-prime mortgage crisis in the US and spilled over to other markets.
• This led to a re-pricing of collateralised securities and increased loan delinquency rates.
• EU banks were affected through liquidity facilities provided to structured investment vehicles and conduits, which faced difficulties in rolling over short-term asset-backed commercial paper.
• This situation revealed concentration risks and led to a reduction in interbank funding availability.
• Despite the strong financial position of EU banks, the impact of the turmoil is expected to negatively affect their non-interest earnings in the second half of 2007.

3. Main Risks and Vulnerabilities

• Credit Risk:

  • Credit risk exposures increased at a slower pace than before.
  • Household and corporate sector credit risks varied across EU countries.
  • Household indebtedness continued to rise in most countries, but remained stable or decreased in some large countries.
  • Corporate insolvencies generally continued to fall due to strong corporate profits and high returns on capital.

• Market Risks:

  • Interest rate risks were present, with a notable increase in exchange rate risks for some EU countries.
  • Exposure to equity market risks remained moderate.
  • Counterparty risks increased, especially for large banks.
  • EU banks further increased their exposure to emerging market economies, seeking less correlated revenue sources.

4. Ability to Withstand Shocks

• Despite the recent financial turmoil, EU banks' shock absorption capacity remains comfortable due to strong profitability and solvency ratios.
• However, the reliance on volatile non-interest income sources and non-deposit funding may increase vulnerability to future shocks.
• The report highlights the importance of continued attention to liquidity risk management, including stress testing and contingency funding planning.

5. Exposure to Residential Property Markets

• The report analyses the risks associated with residential property markets, particularly mortgage credit quality and the sustainability of household mortgage debt.
• While pockets of vulnerability have grown, especially in relation to rising household mortgage indebtedness, the overall risk to households and banks remains limited.
• However, the report warns that these relatively benign conditions may mask a build-up of risks due to the easing of credit standards.

6. Overall Assessment

• The EU banking sector's financial health continued to improve in 2006 and the first half of 2007, enhancing its ability to withstand shocks.
• Nevertheless, the report notes that the financial sector is exposed to risks related to the credit cycle, interest income, and the sustainability of mortgage debt.
• The final implementation of the Basel II Capital Accord is expected to improve risk management practices.
• The report concludes that while the sector is currently stable, the forward-looking assessment suggests an increase in near-term risks.

Key Information

• Reporting Standards: The report distinguishes between IFRS-compliant and non-IFRS-compliant banks due to differences in accounting standards.
• Data Sources: The analysis is based on balance-sheet data and qualitative supervisory information.
• Trends:
  • Profitability improved, especially for large banks.
  • Cost control was effective, though small and medium-sized banks had a heavier cost structure.
  • Non-interest income became a more significant part of total income.
• Challenges:
  • Increased exposure to non-deposit funding and volatile income sources.
  • Risks from the sub-prime mortgage crisis and the re-pricing of credit risk.
  • Vulnerabilities in the household and corporate sectors, particularly with respect to mortgage indebtedness and foreign currency risk.

Conclusion

The EU banking sector showed resilience and stability in 2006 and the first half of 2007, with strong profitability and solvency. However, the recent financial turmoil has introduced new risks, especially for non-interest income and liquidity. The report calls for continued vigilance in managing these risks, particularly through enhanced liquidity risk management and adherence to the Basel II Capital Accord.