AFME Prudential Data Report 4Q 2018 | AFME

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AFME Prudential Data Report 4Q 2018
02 Apr 2019

This report collates timely information on EU GSIBs’ prudential capital, leverage and liquidity ratios with updated information as at 31 December 2018.

It also illustrates the recent performance of the debt and contingent convertibles (CoCo) markets and the funding structure for banks in Europe.

Among the main findings of this report:

  • The weighted average CET1 and leverage ratios for EU GSIBs declined in 2018 against the ratios reported at the end of 2017. This was the first annual decline since 2013 when our dataset began.

    The annual decline in solvency ratios was due to several factors, including the implementation of the new accounting standard (IFRS9), an increase in RWAs and other bank-specific factors.

  • EU GSIBs end-point CET1 ratio stood at 13.1% in 4Q18, below 13.4% in 4Q17. Earnings retention contributed 84bps to the CET1 ratio variation. This increase was offset 24bps by an increase in RWAs. IFRS9 implementation had a weighted-average negative impact of 24bps. Other factors, including FX variation, contributed to fully offset the contribution of profit retention (-64bps)

  • End-point Tier 1 ratios decreased to 14.9% in 4Q18, from 15.1% in 4Q17.

  • End-point Leverage ratios (LR) declined to 4.8% in 4Q18 from 4.9% in 4Q17.

  • Liquidity Coverage Ratio (LCR) improved to 146.7% on a weighted average basis in 4Q18, from 141.8% in 4Q17.

  • Capital raising from markets decelerated from a year ago: The amount of new capital raised during 2018 by EU banks totalled €22.0 bn— the lowest amount raised since 2009. The amount raised in 2018 brings the total tally of capital raised from markets since 2009 to €494 bn.

  • Box: Capital markets trading: a recap of 2018: Securities trading revenues for the largest US and European investment banks marginally increased in 2018, reversing a post-crisis downward trend.

    However, there’s a sharp contrast between US and European trading revenue trends. US banks have continued to increase FICC (Fixed Income Currencies and Commodities) trading market share from 54% in 2012 to 66% in 2018 following a steep downward trend in European banks’ FICC revenues. US banks have consolidated their equity trading market share.