• Published on 7 March 2024
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Basel III capital ratios stable for largest global banks

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.

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 EUR 279 billion ($304 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.

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 EUR 4.0 billion ($4.3 billion), compared with a shortfall of EUR 3.0 billion ($3.2 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%.

Re-disseminated by The Asian Banker