Westpac's impairment charges more than doubled, although its stressed-exposure ratio fell, as collective and individually assessed charges increased. Santander reported a 147-basis-point CET1 impact from its Webster acquisition, while Deutsche Bank's smaller commercial property portfolio contained more Stage 3 loans and higher collateral risk.

Elsewhere, euro-area banks reported tighter corporate lending standards and the sharpest deterioration in access to retail funding since the European Central Bank (ECB) survey series began in 2011. BBVA's buybacks and lending growth absorbed capital, the Federal Reserve found tighter lending standards for non-bank intermediaries and ING released risk-weighted assets through credit-risk transfers. HSBC, BNP Paribas and UBS disclosed contrasting regulatory and capital-distribution pressures.

Read more on the week’s key developments:

1. Westpac doubles impairment charges despite lower stressed exposures

Westpac reported on 2 November that its full-year 2026 impairment charges rose 104% to AUD 864 million ($602.7 million) from AUD 424 million ($295.8 million) in 2025. Pre-provision profit, excluding notable items, increased 4% to AUD 10.9 billion ($7.6 billion). Stressed exposures declined to 1.17% of total committed exposures from 1.28%, while its common equity tier 1 (CET1) ratio stood at 12.46%, leaving AUD 2.9 billion ($2 billion) above its 11.25% capital target after the final dividend.

The higher impairment expense was not driven solely by management overlays. Net collectively assessed charges rose 67% to AUD 766 million ($534.3 million), including AUD 109 million ($76 million) of portfolio overlay charges, up from AUD 59 million ($41.2 million). Net individually assessed charges also rose 51%. The overlays address energy-intensive sectors and discretionary spending, while improving aggregate stress measures suggest deterioration has not spread uniformly through the loan book. With business and institutional lending growing 12% and 18% respectively, subsequent arrears and provisioning in these portfolios will be more informative than the headline doubling of the charges.

2. Santander absorbs Webster acquisition impact as Argentina drives higher loan-loss provisions

Santander disclosed on 28 October that its acquisition of US lender Webster reduced its third-quarter CET1 ratio by 147 basis points. The reported ratio stood at 12.7%; excluding the acquisition impact, the ratio increased 14 basis points during the quarter, including 19 basis points of net organic capital generation. Nine-month loan-loss provisions increased 10% year on year in constant euros, primarily reflecting Argentina. Excluding Argentina, provisions rose 6%, in line with organic loan growth. Its non-performing loan ratio fell three basis points quarter on quarter to 2.90%, with 64% coverage.

At 12.7%, Santander was 10–30 basis points below its 12.8%–13% year-end CET1 objective after Webster's 147-basis-point impact. The quarter's 19-basis-point organic capital contribution was small relative to the acquisition charge. Meanwhile, the group's three-basis-point NPL improvement contrasts with provisions rising 10% overall but only 6% outside Argentina. Subsequent capital generation will show how quickly the ratio recovers from the acquisition effect, while Argentine provisions remain a separate drag on earnings.

3. Deutsche Bank cuts property exposure as troubled loans increase

Deutsche Bank reported on 28 October that third-quarter credit-loss provisions rose 20% year on year to EUR 501 million ($560.7 million), including further commercial real estate (CRE) de-risking and a separate Corporate Bank credit event. Its stress-tested CRE portfolio declined to EUR 22.2 billion ($24.8 billion) at September end from EUR 24.3 billion ($27.2 billion) in December 2025. Within that smaller book, Stage 3 exposures rose to EUR 4 billion ($4.5 billion) from EUR 3.6 billion ($4 billion). The allowance on the stress-tested portfolio rose to approximately EUR 1.2 billion ($1.4 billion). Group CET1 was 14%.

Stage 3 loans consequently increased from about 14.9% to 18.3% of the stress-tested portfolio, despite repayments and asset sales. The weighted average gross loan-to-value (LTV) ratio also rose from 64% to 70%; for US office loans it reached 100%, compared with 88% at the end of 2025. After allowances, the US office net LTV remained at 76%, illustrating the protection already provided by recognised losses. Refinancing and exit prices on the residual impaired properties, rather than gross exposure reduction alone, will determine whether further provisioning is needed.

4. BBVA's buybacks and loan growth erode capital headroom despite earnings growth

BBVA reported on 29 October that its CET1 ratio declined 69 basis points to 12.21% in September from 12.90% in June. The second-framework share buyback accounted for 49 basis points of the reduction. Among recurring movements, quarterly earnings generated 71 basis points, while dividend accrual and additional tier 1 coupons absorbed 38 basis points, organic risk-weighted asset (RWA) growth 44 basis points and other items nine basis points. RWA increased to EUR 434.2 billion ($485.9 billion) from EUR 423.5 billion ($474 billion).

Before the 49-basis-point buyback effect, BBVA's recurring CET1 movement was negative by 20 basis points: earnings added 71 basis points but did not cover distributions, coupons and organic RWA growth. The RWA impact was measured at constant exchange rates and net of risk-transfer initiatives, separating lending-related capital consumption from currency movements. BBVA remained 324 basis points above its 8.97% regulatory requirement but only 21 basis points above the top of its 11.5%–12% management range. This narrower internal cushion limits room for additional payouts alongside continued loan growth.

5. ECB survey shows tighter corporate lending and weaker bank funding access

The ECB 27 October bank lending survey found a net 9% of euro-area banks tightening corporate credit standards in the third quarter, against 7% in the preceding quarter. Corporate loan demand moved from a net 3% increase to a net 6% decline, while a net 14% of banks tightened standards for consumer credit. A net 9% reported deteriorating access to retail funding, up from 3% in the second quarter and the highest reported deterioration since that series began in 2011.

The simultaneous decline in corporate loan demand matters when interpreting tighter lending standards: fewer new loans cannot be attributed entirely to bank restrictions when borrowers are also seeking less credit. Banks identified rising risk perceptions as a key reason for tighter underwriting. Separately, the net 9% deterioration in retail-funding access, coupled with expectations of weaker debt-security funding in the fourth quarter, points to pressure on the liability side even if slower lending eases RWA growth. These are survey responses, not measured deposit withdrawals or realised loan losses.

6. Fed finds tighter bank credit standards for non-bank intermediaries

The Federal Reserve's Senior Loan Officer Opinion Survey, released on 2 November, found US banks tightened standards on net for all five surveyed categories of non-depository financial institutions in the third quarter. Among 50 banks lending to business credit intermediaries, 24% tightened standards and 2% eased them; 74% reported no change. Of 52 banks lending to private equity funds, 19.2% tightened and 3.8% eased. Demand strengthened on net for loans to both business credit intermediaries and private equity funds.

Among business credit intermediary lenders, those tightening standards exceeded those easing by 22 percentage points; the gap was 15.4 points for private equity fund lenders. Both groups nevertheless reported stronger loan demand. Banks cited a more uncertain economic outlook and weaker non-bank borrower financial strength, whereas additional liquidity and refinancing needs contributed to demand. The opposing movements are most consequential when intermediaries renew bank credit lines, although the 74% reporting unchanged standards for business credit intermediaries argue against treating this as a system-wide withdrawal.

7. ING uses risk transfers to free up capital for shareholder returns

ING announced on 29 October that significant risk-transfer transactions in Wholesale and Retail Banking reduced third-quarter risk-weighted assets (RWA) by EUR 3 billion ($3.4 billion). The bank reported a CET1 ratio of 13.3% and announced an additional EUR 1.9 billion ($2.1 billion) shareholder distribution, comprising a buyback of up to EUR 1.65 billion ($1.8 billion) and a EUR 250 million ($279.8 million) cash payment in January 2027. Its prevailing CET1 requirement, including buffers, was 11.10%.

ING's EUR 3 billion ($3.4 billion) RWA reduction changes the denominator of its CET1 ratio; it does not raise new equity or necessarily reduce outstanding loans by the same amount. The announced distribution's 56-basis-point CET1 effect is already included in the reported 13.3%, so deducting it again would understate capital headroom. ING was 220 basis points above its 11.10% regulatory requirement but only 30 basis points above its operating CET1 target of around 13%. That narrower management cushion is more informative for assessing additional buybacks than the gross RWA relief alone.

8. HSBC projects Basel capital benefit as credit costs stay above medium-term range

HSBC reported on 27 October that its CET1 ratio declined 20 basis points during the quarter to 13.9% as RWA growth, lower valuations on certain debt instruments, and a share buyback outweighed part of its earnings generation. It intends to initiate a further buyback of up to USD1 billion. Based on its modelling, the bank expects final Basel 3.1 standards to be effective on 1 January 2027 to increase its CET1 ratio by approximately 40–50 basis points. It projected a 2026 expected credit-loss charge of about 45 basis points of average gross loans.

HSBC's 13.9% CET1 ratio was 10 basis points below the bottom of its 14%–14.5% medium-term management range. A modelled 40–50-basis-point improvement from Basel 3.1 would be material, but implementation is scheduled for January 2027 and the eventual ratio will also reflect intervening earnings, RWA and distributions. The projected 45-basis-point credit charge is 5–15 basis points above HSBC's medium-term loan-loss planning range. For the proposed USD1 billion buyback, regulatory relief remains prospective while credit costs are expected to exceed the longer-term assumption in 2026.

9. BNP Paribas faces limited capital impact from higher ECB requirement

BNP Paribas disclosed on 29 October that the European Central Bank (ECB) had set its 2027 Pillar 2 Requirement (P2R) at 1.90%, 17 basis points higher than in the 2025 supervisory review. The bank said the change raised its CET1 requirement by only two basis points under the new methodology. From 1 January 2027 its minimum CET1 requirement will be 10.73%, excluding Pillar 2 Guidance. BNP Paribas reported a 12.91% CET1 ratio and a 4.44% leverage ratio at September-end, against a 3.85% leverage requirement.

The difference between the 17-basis-point P2R increase and the two-basis-point CET1 effect reflects a change in how the supervisory add-on for older non-performing loans is treated. From 31 December 2026, that add-on is incorporated into the CET1 ratio instead of remaining wholly within the CET1 component of P2R. The September reported ratio exceeded the January 2027 minimum by 218 basis points, before Pillar 2 Guidance and later balance-sheet changes. BNP Paribas said the relevant legacy loans continued to amortise during 2026, reducing the risk of interpreting the higher P2R headline as an equivalent new common-equity burden.

10. UBS buybacks face uncertainty over Swiss capital rules for foreign subsidiaries

UBS reported on 28 October that its CET1 ratio was 14.7% and its CET1 leverage ratio 4.6%. It repurchased $1.8 billion of shares in the third quarter and plans to complete its $3 billion 2026 buyback programme by publication of fourth-quarter results. The bank said the amount and pace of further repurchases depend on financial performance, maintaining a CET1 ratio around 14% and clearer outcomes from Swiss parliamentary deliberations on the capitalisation of foreign subsidiaries.

UBS's September CET1 ratio was 70 basis points above the approximately 14% level management aims to maintain, yet the bank expects to end 2026 at or near that level, potentially after accruing for initial 2027 repurchases. Proposed requirements for foreign subsidiaries could also leave more capital committed locally, reducing what can support distributions elsewhere in the group. Because the Swiss measures remain under parliamentary deliberation, the consequence is uncertainty over repurchases beyond the announced $3 billion 2026 programme, not a final, quantified additional capital charge.