The European Banking Authority (EBA) published its Q4 2025 Risk Dashboard, indicating that the EU/EEA banking sector remained robust with strong capitalisation, ample liquidity and solid asset quality despite rising global uncertainty linked to renewed conflict in the Middle East. The release is accompanied for the first time by a new Capital Requirements Regulation/Capital Requirements Directive (CRR3/CRD6) dashboard, which replaces the former Basel 3 monitoring report. Disclosures in the Risk Dashboard show EU/EEA banks’ direct exposures to counterparties located in the Middle East totalled EUR 132bn at end-2025, including around EUR 47bn in loans and advances to banks and other financial corporations and around EUR 33bn to non-financial corporations, representing less than 0.5% of total assets. Risk-weighted assets rose by just over 1% in 2025 to EUR 10.2trn in Q4, while the transitional CET1 ratio under CRR3 stayed at 16.3% and return on equity was 10.4%; net interest margin edged up to 1.6% and the cost-to-income ratio rose to its highest level since March 2023. Total assets were stable at EUR 29.1trn, loans increased by more than 1% (driven mainly by residential real estate-backed lending and SME financing), non-performing loans declined slightly to EUR 370bn with the NPL ratio stable at 1.8%, and Stage 2 loans fell to 9.1%. Liquidity metrics strengthened further, with the liquidity coverage ratio rising to 163.1% and the net stable funding ratio to 126.9%, while the loans-to-deposit ratio declined to 104.8 and customer deposits increased in Q4 for households (1.8%) and non-financial corporates (3.6%). The CRR3/CRD6 dashboard, published on the European Data Access Portal, projects key capital metrics across the 2025–2030 output floor implementation period and under the fully loaded framework. Under fully loaded CRR3 implementation, the average CET1 ratio is projected at around 15.3%, reflecting an average 4.7% relative increase in Tier 1 minimum required capital once the output floor is fully phased in; the number of institutions bound by the output floor is projected to rise from 2 at December 2025 to 33 when fully loaded. Under a static balance sheet assumption, no capital shortfalls are projected before 2030, after which the shortfall is estimated at EUR 424.8m, rising to EUR 12.7bn once the output floor is fully implemented; the EBA also notes current supervisory reporting data do not yet fully capture credit risk transitional arrangements and this limitation will be addressed in future releases.

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