Basel III capital ratios for largest global banks were largely stable and above pre-pandemic levels in the first half of 2023, latest Basel III monitoring exercise shows
- Initial Basel III capital ratios were largely stable and above pre-pandemic levels in the first half of 2023 while liquidity coverage ratios increased.
- Profit after tax of large internationally active banks increased to a record €279 billion.
- New features in the Tableau interactive dashboards explain the latest results for the Liquidity Coverage Ratio.
Initial Basel III capital ratios for a sample of the largest global banks were largely stable and above pre-pandemic levels in the first half of 2023, according to the latest Basel III monitoring exercise, published today. The leverage ratio rose further in Europe after declining in all regions during the pandemic.
In the same period, the profit after tax of large internationally active banks increased to a record €279 billion.
The report, based on data as of 30 June 2023, sets out the impact of the Basel III framework, including the December 2017 finalisation of the Basel III reforms and the January 2019 finalisation of the market risk framework. It covers both Group 1 and Group 2 banks (see note to editors for definitions).
The implementation of the final Basel III minimum requirements began on 1 January 2023. In the first half of 2023, the average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks was +4.9%, compared with +3.1% at end-December 2022. Group 1 banks report total regulatory capital shortfalls amounting to €4.0 billion, compared with a shortfall of €3.0 billion at end-December 2022.
The monitoring exercise also collected bank data on Basel III liquidity requirements. The weighted average Liquidity Coverage Ratio (LCR) rose from the previous reporting period to 138.6% for Group 1 banks, surpassing pre-pandemic levels. Three Group 1 banks reported an LCR below the minimum requirement of 100%.
The weighted average Net Stable Funding Ratio (NSFR) decreased to 124.1% for Group 1 banks. All banks reported an NSFR above the minimum requirement of 100%.
The report is accompanied by interactive Tableau dashboards that allow users to explore the results with greater ease and flexibility. In addition to dashboards published previously, there is now additional explanatory content on the Liquidity Coverage Ratio dashboard.
Note to editors
Through a rigorous reporting process, the Basel Committee regularly reviews the implications of the Basel III standards for banks and has been publishing the results of such exercises since 2012.
The results of the monitoring exercise assume that the positions as of 30 June 2023 were subject to the fully phased-in initial or final Basel III standards. That is, they do not account for transitional arrangements set out in the Basel III framework. No assumptions were made about bank profitability or behavioural responses, such as changes in bank capital or balance sheet composition. For that reason, the results of the study may not be comparable with industry estimates.
Data are provided for 177 banks, including 112 large internationally active banks. These "Group 1" banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion and include 29 institutions that have been designated as global systemically important banks (G SIBs). The Basel Committee's sample also includes 65 "Group 2" banks (ie banks that have Tier 1 capital of less than €3 billion or are not internationally active).