3 Jun 2026
Financial reporting of European banks 2026
Our recent study shows no deterioration in credit risk despite challenging and uncertain macroeconomic environment.
Financial reporting of European banks: benchmark study 2026
3 June 2026
Tags
Financial services
Finance
Insights
Our recent study shows no deterioration in credit risk despite challenging and uncertain macroeconomic environment.
Large European banks included in the sample maintain their resilience despite geopolitical risk and increased market volatility.
Our latest IFRS 9 benchmark study analyses the expected credit loss (ECL) levels and their changes for 26 large European banking groups, including two Irish banks, based on their 2025 annual reports published before 1 April 2026.
It examines the impact of ECL charges on profitability, movements in ECL allowances and coverage ratios, the allocation of exposures between IFRS 9 stages, the use of post-model adjustments and Banks’ approaches to the macroeconomic scenarios used in forward-looking information.
Overall, Irish banks are in line with the stable trend represented across European peers.
Key insights from Irish banks
- Slightly higher AC coverage ratios in Irish banks (1.4% and 1.6%) in comparison to the average for the European banks (1.2%).
AC loans coverage ratio YE 2025 vs YE 2024
- Consistently higher proportion of exposures classified to Stage 2 and ECL carried by Stage 2 exposures in Irish banks vs European peers.
Allocation by stage of AC loans gross carrying exposures in YE 2025
- More volatility in the YoY changes in ECL charge/release exhibited by Irish banks vs European peers.
Changes in ECL charge and release Var. YE 2025 vs YE 2024
Key insights from the whole sample
- The average coverage ratio for amortised cost (AC) loans fell to 1.2%, compared with 1.26% in 2024 and 1.57% in 2019.
- Stage 1 coverage ratios decreased across the sample while Stage 2 and Stage 3 coverage ratios increased slightly on average.
- Banks’ forward-looking scenarios continue to reflect caution, with downside scenarios weighted at or above 20% by most banks in the sample. These scenarios mainly account for the macroeconomic uncertainty and geopolitical risks.
- Post-model adjustments and overlays continued to decline, representing only 9% of amortised cost loan ECL allowances in 2025, compared with 10% in 2024.
- The average ECL charge increased by 14% year-on-year while its average share of operating profit before ECL remained broadly stable at 13%.
28 May 2026
Aligning risk culture with strategy boardroom view
As regulatory expectations evolve and firms navigate increasing complexity, risk culture has become a central focus for boards.
21 May 2026
Solvency II revision – implications for Ireland
The revision of Solvency II represents a significant evolution of Europe’s prudential framework for insurers, with the dual aim of strengthening resilience while enhancing the sector’s capacity to support long-term investment.
Contact
Laura Angelin Partner, Audit & Assurance, incl. Sustainability - Dublin
Michael Tuohy Partner, Audit & Assurance - Dublin
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Financial reporting of European banks
Based on 2025 annual reports provided by European banks before 1 April 2026