The European Banking Authority published its second quarter 2026 Risk Dashboard, finding that EU and EEA banks maintained robust capital and liquidity, strong asset quality and high profitability despite geopolitical and macroeconomic uncertainty. The Common Equity Tier 1 ratio was 16.1%, providing about 430 basis points of headroom above regulatory requirements, while the Liquidity Coverage Ratio and Net Stable Funding Ratio stood at 158.5% and 125.7%, respectively. Household and nonfinancial corporate lending rose 5.2% and 6.3% year over year, although growth varied across countries. The nonperforming loan ratio remained at 1.8%, while Stage 2 loans declined to 8.9% of total loans. Return on equity increased to 11.3%, supported mainly by loan growth and wider net interest margins. Direct IT sector exposures represented 4% of corporate lending and showed no deterioration, but the EBA highlighted risks from geopolitical tensions, rising interest rates, elevated asset valuations and increasingly concentrated artificial intelligence related financing.
2026-09-25European Banking Authority
European Banking Authority finds EU and EEA banks remain strong despite heightened external risks
The European Banking Authority found that EU and EEA banks maintained strong capital, liquidity, asset quality and profitability in the second quarter of 2026. The sector’s Common Equity Tier 1 ratio was 16.1% and return on equity reached 11.3%, although geopolitical uncertainty, rising rates and elevated asset valuations require close monitoring.