The European Banking Authority published its Q2 2025 Risk Dashboard, providing aggregated supervisory statistics for the largest EU/EEA credit institutions. The data show a modest improvement in capital and liquidity positions and slightly higher profitability, even as net interest margin continued to compress and net interest income fell back to levels last seen in December 2023. Common Equity Tier 1 rose to 16.3% (up 10 bps quarter on quarter) as capital growth outpaced a roughly 2.2% increase in risk-weighted assets driven by credit risk RWAs. The liquidity coverage ratio increased to 161.6% and the net stable funding ratio to 127.2%, while the earlier large-scale shift in high-quality liquid assets from cash to central government assets slowed. Total assets increased by EUR 100bn to EUR 29tn, with cash balances falling to 10.2% of assets and a marginal increase in other classes and derivatives; liabilities stood at EUR 27tn with little change in structure. Loan volumes to households and non-financial corporates were stable, while loans to small and medium-sized enterprises fell 0.8% quarter on quarter; sovereign exposures rose to EUR 4tn (up 9.5% year to date and 13.6% year on year) and the domestic share declined to 45% from 47% in December 2024. Credit quality improved slightly with non-performing loans at EUR 372.6bn (1.84% of total loans) and IFRS 9 stage 2 at 9.4% after an approximately EUR 20bn reduction in stage 2 loans; the cost of risk fell to 48 bps from 57 bps. Return on equity increased to 10.7% (from 10.5%) and return on assets to 0.75%, while net interest margin tightened to 1.58% and net fees and commissions edged down versus the prior quarter.

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