Throughout 2024, we observed a continued reduction in credit risk buffers, despite persistent macroeconomic pressures and geopolitical challenges. As we examine the year-end results of the region’s largest institutions, what do the figures reveal about how they manage expected credit losses (ECLs) in an increasingly unpredictable environment?
This report reviews 2024 year-end disclosures from 26 banks across 12 European countries, offering insights into the effects of financial disruption and global instability on ECL estimates. Now in its ninth edition, the study continues a series launched in 2020 to track the evolving response of European banks to emerging risks.
I am pleased to announce that the ninth edition of our ‘Financial reporting of European banks. This edition analyses the 2024 annual reports of 26 of the largest banks across 12 European countries, offering insights into how ongoing crises are impacting their expected credit losses. Overall we are seeing a general decrease in expected credit loss allowances across the EU with decreases for our two largest Irish domestic banks being higher than the EU average. New in our study in this edition is the analysis of the impact of climate risk on expected credit loss across the EU Banking sphere.
Michael Tuohy
Partner, Audit & Assurance
Key insights on expected credit losses
The analysis centres on ECL developments, with key findings on:
- ECL charge impact of YE 2024 on the profit or loss and ECL allowances.
- ECL allowances: changes in coverage ratios and allocation between stages.
- Post-model adjustments/overlays.
- Forward-looking information.
