Financial reporting of European banks: benchmarking analysis 2026

Ongoing geopolitical instability, fluctuating market conditions and changing economic forecasts continue to influence risk outlooks across the industry. However, a review of the latest annual reports from major European banking groups suggests that credit quality has, overall, remained stable.

Our 2026 benchmark study examines expected credit loss (ECL) disclosures from 26 leading European banks based on their 2025 annual reports released before 1 April 2026. The analysis explores how banks are managing credit risk through evolving economic conditions, focusing on ECL charges, allowance movements, coverage levels, IFRS 9 staging trends, management overlays and the forward-looking assumptions underpinning impairment models.

Key insights

• ECL charges increased by an average of 14% compared with the previous year, although the proportion of operating profit absorbed by ECL remained broadly unchanged at 13%.
• Amortised cost loan portfolios grew by 3%, driven primarily by growth in Stage 1 exposures, while total ECL allowances declined by 1.9%.
• Average coverage ratios for amortised cost lending continued their gradual decline, reaching 1.2% in 2025 compared with 1.26% in 2024.
• Stage 1 coverage ratios fell across much of the sample, whereas Stage 2 and Stage 3 coverage ratios recorded modest increases.
• Reliance on post-model adjustments and management overlays reduced further, accounting for 9% of total amortised cost loan ECL allowances, down from 10% a year earlier.
• Most banks maintained a cautious outlook within their impairment models, assigning a weighting of 20% or more to downside economic scenarios.

The results of this year’s study highlight a sector that is balancing resilience with caution. Monitoring how the trends develop over the coming year will provide valuable insight into the sector’s ability to adapt to an increasingly uncertain landscape.

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