- Initial Basel III capital ratios increased to the highest level since the beginning of the exercise in 2012, and banks’ profits remained at or near record high levels across all regions in H2 2021.
- The latest monitoring report includes special features on banks’ exposures to crypto assets, and on capital buffers and total CET1 requirements.
- Dashboards now provide an interactive visualization of the results for market, operational, counterparty credit and credit valuation adjustment risks.
Basel III capital ratios for a sample of the largest global banks increased last year to the highest level since assessment results were first published in 2012, according to the latest Basel III monitoring exercise, based on 31 December 2021 data, published today. After a drop in the previous period, the leverage ratio increased, driven by banks in Europe and the “rest of the world” region.
Profits after tax for the sample of Group 1 banks were €274 billion in the second half of 2021, almost at the record high levels reached in the first half of the year. The report sets out the impact of the Basel III framework, including the December 2017 finalization of the Basel III reforms and the January 2019 finalization of the market risk framework. It covers both Group 1 and Group 2 banks.
The final Basel III minimum requirements will be implemented by 1 January 2023 and fully phased in by 1 January 2028. The average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks is +2.4%, compared with a 3.3% increase at end-December 2020. For this reporting date, Group 1 banks reported total regulatory capital shortfalls amounting to €0.1 billion, compared with a shortfall of €2.3 billion at end-June 2021.
The monitoring exercises also collect bank data on Basel III’s liquidity requirements. The weighted average Liquidity Coverage Ratio (LCR) decreased to 141% for the Group 1 bank sample and to 224% for Group 2 banks. In the current reporting period there are six Group 1 banks with an LCR below 100%. This is driven by banks using LCR reserves during the Covid-19 pandemic as intended by the framework. All Group 2 banks report an LCR well above the minimum requirement of 100%.
The weighted average Net Stable Funding Ratio (NSFR) increased to 125% for the Group 1 banks. As of December 2021, all banks in the NSFR sample reported a ratio that met or exceeded 100%.