Financial reporting of European banks: benchmark study 2025

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. 

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Disruptive U.S. tariff instability is expected to impact credit quality and investment in future financial reports, but current figures show that credit risk was historically low in 2024, leading to greater capacity to face emerging risks in 2025.

Using data published in year-end reports by 26 European banking groups before April 2025, the latest study shows:

• The proportion of loans covered for credit risk is decreasing (the average amortised cost loan coverage ratio is down to 1.26% in 2024 from 1.36% in 2023 and 1.57% in 2019).
• The percentage of expected credit losses compared to operating profits also fell to 12% from 16% in 2023 as a result of the decrease in ECL charge combined with an average increase in operating profit.
• Banks reported slightly more gross credit exposures (+1.9%) but had reduced allowances for ECLs (-6.3%).
• The weight of cumulative overlays in amortised cost loans ECL allowance continued to fall slightly during 2024 compared to previous years (10% in 2024 compared to 12% in 2023 and 14% in 2022.)
• How banks categorise loans based on credit risk remains stable (89.2% in Stage 1 and 2.1% in Stage 3) compared to 2023 reports (88.7% in Stage 1 and 2.2% in Stage 3), but ECL allowance increased for riskiest loans (Stage 3) and decreased for less risky loans (Stage 1).
• Of 21 banks that provided comprehensive findings, 12 adjusted their weightings in their macroeconomic scenarios used in ECLs from 2024: six banks suggested a more cautious outlook and the other six appeared more optimistic than in 2023.
• Projections of future growth rates are now more closely aligned with the European Central Bank and the Bank of England expectations.

Partner Vincent Guillard, who leads the annual study, said:“In line with 2023, our study confirms the decline in credit risk recognised by banks in 2024. Banks continued to reduce their post-model adjustments related to macroeconomic uncertainties in their balance sheets (10% in 2024 vs 14% in 2023 and 16% in 2022), while new climate-related risks emerged but are not considered significant in the short term by banks. However, recent decisions on U.S. trade policy had generally not been factored into banks' credit risk in 2024 and could have an impact on the half-yearly and annual financial statements for 2025.”

About the study    

This study is based on information disclosed in 26 European banks’ annual reports published before 1 April 2025, without taking into account any press releases, investor-oriented presentations or similar publications. The detailed methodology is explained fully in the report.