Highlights of the Basel III monitoring exercise as of 31 December 2024

To assess the impact of the Basel III framework on banks, the Basel Committee on Banking Supervision monitors the effects and dynamics of the reforms. For this purpose, a semiannual monitoring framework has been set up for the risk-based capital ratio, the leverage ratio and liquidity metrics, using data collected by national supervisors on a representative sample of institutions in each country. Since the end-2017 reporting date, the analyses have also captured the effects of the Committee's finalisation of the Basel III reforms.¹ This summary is based on aggregate results using data as of 31 December and compares it with the previous reporting period. The Committee believes that the information contained in this summary and the related dashboards will provide relevant stakeholders with a useful benchmark for analysis.

Information considered in the analysis was obtained from voluntary and confidential submissions of data from individual banks and their national supervisors. At the jurisdictional level, there may be ongoing mandatory data collection, which also feeds into this report. Data were included for 176 banks, including 116 large internationally active ("Group 1") banks, among them 29 global systemically important banks (G-SIBs) and 59 other ("Group 2") banks.² Members' coverage of their banking sector is very high for Group 1 banks, reaching 100% coverage for some countries, while coverage is lower for Group 2 banks and varies by country.

In general, these analyses do not consider any transitional arrangements such as grandfathering arrangements. Rather, the estimates presented assume full implementation of the Basel III requirements based on data as of 31 December 2024. No assumptions have been made about banks' profitability or behavioural responses, such as changes in bank capital or balance sheet composition, since this date or in the future. Furthermore, the report does not reflect any additional capital requirements under Pillar 2 of the Basel III framework.

• Compared with the June 2024 reporting period, the average Common Equity Tier 1 (CET1) capital ratio under the initial Basel III framework increased from 13.4% to 14.0% for Group 1 banks. This is mainly due to the fact that capital increases in a larger scale than risk-weighted assets (RWA).
• The average impact of the Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks increased when compared with June 2024 (+2.1% impact). The impact also increased slightly for G-SIBs (+1.5%).
• There has not been any capital shortfall in H2 2024, while in the previous period it was negligent.
• Applying the 2022 minimum total loss-absorbing capacity (TLAC) requirements and the current Basel III framework, 20 G-SIBs reporting TLAC data reported an aggregate incremental shortfall of €5.7 billion.
• The average Liquidity Coverage Ratio (LCR) of Group 1 banks slightly decreased (–1.1 percentage points) compared with June 2024, which is mainly due to an increase in net outflows. On the other hand, the average Net Stable Funding Ratio (NSFR) is stable at around 123.7%.

• The balanced data set for Group 1 banks showed a slightly increase (+0.6 percentage points) in current total Basel III capital ratios in December 2024 in comparison with June 2024, driven by an increase in Tier 1 capital of a larger magnitude than the increase in RWA. The overall CET1 capital ratios for Group 1 banks in the balanced data set were 14.3% in December 2024.
• Currently, the Tier 1 capital ratios are higher in Europe than in the Americas and the rest of the world. However, this relationship was the reverse from 2011 to 2014. The Americas are also the main driver for the increase in H2 2024 (+127 basis points).

• For Group 1 banks, Tier 1 MRC would increase by 2.1%, following the full phase-in of the final Basel III standards. The increase in the MRC is underpinned by the incremental impact of the risk-based requirements by 4.6%, offset by the reduction in leverage ratio requirements by 2.5%. The increase in risk-based components is mainly driven by the output floor (+3.5%), market risk (+1.2%) and credit risk (+0.5%).
• The impact on MRC across regions varies considerably for Group 1 banks. There is a moderate impact in the "rest of the world" region (+1.1%) while the impact on MRC for European banks (+2.5%) and those of the Americas (+3.2%) is quite significant.
• For Group 2 banks, the overall 1.3% impact on Tier 1 MRC is driven by an increase in the risk-based measure of 4.7%, stemming mainly from credit risk (+0.8%) and the output floor (+3.0%), which is partially offset by a reduction in leverage ratio MRC (–3.5%).

• For the balanced data set of Group 1 banks, the leverage ratio was stable during H2 2024. This contrasts with the decrease that started at end-2021, particularly for the Americas.
• Leverage ratios for Group 1 banks are still lower in Europe (5.1%) than in the Americas (5.8%) and the rest of the world (7.1%).
• For the unbalanced data set as of the December 2024 reporting date, the average fully phased-in final Basel III Tier 1 leverage ratios are 6.2% for Group 1 banks, 6.0% for G-SIBs and 6.5% for Group 2 banks.

• For this reporting date, none of the banks in the sample reported a regulatory capital shortfall.

• From end-June 2011 to end-December 2024, the level of Group 1 banks' CET1 capital increased by 146% from €1,357 billion to €3,336 billion. Since end-June 2024, Group 1 CET1 capital has increased by €92 billion (or 2.8%).
• Over H2 2024, CET1 capital increased across all regions, with the most notable increment in the rest of the world.
• Overall, profits after tax increased for the Group 1 banks in the sample and stood at €245.1 billion in H2 2024, but still below their peak as observed at end-June 2023. The dividend payout ratio stood at 39.6%, which is about 153 basis points above the one reported in the preceding period.

• Annual after-tax profits for the Group 1 banks (ie summed up over two consecutive reporting dates) increased in the Americas (+20.4%) while they declined in Europe (–1.4%) and the rest of the world (-16.4%) compared with the 12-month period ending December 2023.
• Compared with the previous reporting date, the annual dividend payout ratio has increased significantly in the rest of the world, while it has been stable in Europe and in the Americas. It is significantly below the record high ratios observed in 2019 and 2020 in the Americas, while it is at pre-pandemic levels in Europe and the rest of the world.

• As of December 2024 and for Group 1 banks, non-securitisation credit risk³ continues to be the dominant portion of overall MRC, on average covering 70.1% of total MRC. Among the non-securitisation credit risk asset classes, the share of MRC for corporate exposures increased from 29.6% at end-June 2011 to 31.5% at the current reporting date. Other notable changes compared with the previous reporting date are equity exposure (+2.4 percentage points) and bank exposure (–0.4 percentage points).
• The share of operational risk in MRC increased sharply from 8.7% at the end-June 2011 to 18.5% at end-2018 and then decreased to reach 16.0% at the current reporting date. The increase in the early 2010s was attributed in large part to the surge in the number and severity of operational risk events during and after the financial crisis, which are factored into the calculation of MRC for operational risk under the advanced measurement approach. More recently, there has been some "fading out" of the financial crisis losses so that in 2022, the lowest loss level of the previous 10 years is observed. This explains the latest decrease in capital requirements, especially for the banks heavily affected in the Great Financial Crisis. In contrast, losses triggered by the Covid-19 pandemic are not yet having a significant impact on the loss severity level, but this may be the case in the near future.
• The share of MRC for securitisation exposures decreased rather steadily between end-June 2011 and end-December 2024.

• The weighted average LCR at end-December 2024 is 134.8% for Group 1 banks and 200.8% for Group 2 banks.
• In the current reporting period, three Group 1 banks had an LCR below 100% and hence a shortfall (ie the difference between high-quality liquid assets and net cash outflows), which amounts to €17.8 billion.
• The weighted average NSFR was 123.7% for Group 1 banks and 135.2% for Group 2 banks at end-December 2024.
• All banks reported an NSFR that exceeded 100%.

• For a balanced data set of Group 1 banks, all but two banks meet a 100% LCR at end-December 2024, resulting in an aggregate shortfall of €16.0 billion. The shortfall increased by €4.0 billion since December 2023. The average LCR for this sample decreased to 133.2% at end-December 2024 compared with 135.0% in the previous reporting period. Banks in the sample did not experience drops in the LCR during the turmoil as some banks outside the monitoring sample did.
• There was again no aggregate NSFR shortfall for the balanced data set of Group 1 banks. The average NSFR for the same sample of banks increased from 122.0% as of June 2024 to 123.0% in December 2024.

• For a balanced data set of Group 2 banks, the LCR shortfall has remained at zero since June 2017. The average LCR for the same sample of banks decreased by 0.1 percentage points to 193.9% in December 2024, caused by a lower increase in HQLA relative to net outflows compared with the last reporting date.
• The aggregate NSFR shortfall remained at zero for the balanced data set of Group 2 banks. The average NSFR for the same sample of banks increased by 5.2 percentage points to reach 137.1% in December 2024 in comparison with the previous reporting date.

• Since 2020, the weighted average LCR for both Europe and the rest of the world has largely been above 140%, while the average LCR for the Americas has been around 120%. While Europe and the Americas initially had lower average LCRs compared with the rest of the world, the average LCRs of Europe and the rest of the world tended to gradually converge before the onset of the pandemic. The regions with lower end-2012 average ratios saw significant increases, in particular between end-2012 and June 2014, and Europe saw such increases again at the start of the pandemic. The increase in Europe was reversing between June 2021 and June 2022, although since then the LCR of European banks is still above end-2019 levels.
• The weighted average NSFR at end-December 2024 for Group 1 banks in each of the three regions was well in excess of 100%. The average NSFR in Europe decreased from 122.6% at end-June 2024 to 121.8% at end-December 2024. After a significant drop during H1 2022, the NSFR of banks in the Americas reverted, landing at 120.8% at end-December 2024.

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¹ See Basel Committee on Banking Supervision, High-level summary of Basel III reforms, December 2017, www.bis.org/bcbs/publ/‌d424_hlsummary.pdf; Basel Committee on Banking Supervision, Basel III: finalising post-crisis reforms, December 2017, www.bis.org/bcbs/publ/d424.htm.

² Group 1 banks are those that have Tier 1 capital of more than €3 billion and are internationally active. All other banks are considered Group 2 banks. Not all banks provided data relating to all parts of the Basel III framework.

³ Here, non-securitisation credit risk is defined as the sum of corporate, bank, sovereign, retail, equity and other credit, as illustrated in the graph.