European Banking Authority reports EU EEA banks remain resilient while highlighting rising geopolitical cyber and non-bank risks

The European Banking Authority published its Spring 2026 Risk Assessment Report, first-quarter 2026 Risk Dashboard and Spring 2026 Risk Assessment Questionnaire results, finding that EU and EEA banks remain in a strong position despite a more difficult risk environment. Capital and liquidity levels remain solid, asset quality is strong, profitability has been sustained and funding conditions are still broadly favourable even as financial market uncertainty has increased. The update points to several areas of growing risk. Heightened geopolitical tensions, including the conflict in the Middle East, could affect banks indirectly through higher energy prices, renewed inflationary pressure, weaker economic activity and greater market volatility, even though direct exposures to the affected regions are limited. Operational and cyber risks are also rising as financial services become more digital, advanced technologies including artificial intelligence are adopted more widely and cyber threats evolve, increasing the need for operational resilience, cybersecurity controls and contingency planning. In parallel, the EBA flagged the expansion of private credit markets and stronger links between banks and non-bank financial institutions, noting that banks' exposures to NBFIs have increased notably in recent quarters and that private credit exposures, while estimated to be limited, are concentrated in larger institutions. Drawing on funding plan data and outlooks, the report also reviews lending activity, balance sheet developments, funding strategies and profitability prospects.