- Initial Basel III capital ratios were largely stable and above pre-pandemic levels in the first half of 2023 while liquidity coverage ratios increased.
- Profit after tax of large internationally active banks increased to a record €279 billion.
Initial Basel III capital ratios for a sample of the largest global banks were largely stable and above pre-pandemic levels in the first half of 2023, according to the latest Basel III monitoring exercise. The leverage ratio rose further in Europe after declining in all regions during the pandemic.
In the first half of 2023, the average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks was +4.9%, compared with +3.1% at end-December 2022. Group 1 banks report total regulatory capital shortfalls amounting to €4.0 billion, compared with a shortfall of €3.0 billion at end-December 2022.
Group 1 banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion and include 29 institutions that have been designated as global systemically important banks (G SIBs).
The monitoring exercise also collected bank data on Basel III liquidity requirements. The weighted average Liquidity Coverage Ratio (LCR) rose from the previous reporting period to 138.6% for Group 1 banks, surpassing pre-pandemic levels. Three Group 1 banks reported an LCR below the minimum requirement of 100%.
The weighted average Net Stable Funding Ratio (NSFR) decreased to 124.1% for Group 1 banks. All banks reported an NSFR above the minimum requirement of 100%.