Basel III capital ratios 鈥渓argely stable鈥� for largest global banks, BIS finds
06 March 2024 Switzerland
Image: AdobeStock/AdobeStock/bakhtiarzein
Basel III Capital ratios for the world鈥檚 largest banks during H1 2023 were 鈥渓argely stable鈥� and above their levels prevailing before the Covid pandemic, according to the Bank of International Settlement (BIS).
These assessments, based on the Initial Basel III framework, found that Tier 1 common equity (CET1) for the largest Global Systemically Important Banks (G-SIBs) had contracted from 13.0 per cent on 31 December 2022 to 12.7 per cent on 30 June 2023, with the CET1 ratio for Group 1 banks falling from 13.1 per cent to 12.9 per cent.
The weighted-average Net Stable Funding Ratio (NSFR) fell by 0.3 per cent to 124.1 per cent for the Group 1 banks and by 2.6 per cent to 124.0 per cent for the G-SIBs over this six-month period.
However, liquidity coverage had improved over this timeframe, with the Liquidity Coverage Ratio (LCR) for Group 1 banks rising from 137.3 per cent to 138.6 per cent, and from 134.4 per cent to 137.0 per cent for the G-SIBs.
Significantly, the BIS finds that profit after tax for large internationally active banks rose to a record 鈧�279 billion over the period.
With the final Basel III minimum capital requirements coming into play from 1 January 2023, the average impact of the fully phased in final Basel III framework was a rise of 4.9 per cent in Tier 1 minimum required capital (MRC) for Group 1 banks compared with +3.1 per cent for 31 December 2022.
Group 1 banks experienced a total regulatory capital shortfall of 鈧�4.0 billion on 30 June 2023, compared with a 鈧�3.0 billion shortfall at the end of December 2022, according to the recently released .
These assessments, based on the Initial Basel III framework, found that Tier 1 common equity (CET1) for the largest Global Systemically Important Banks (G-SIBs) had contracted from 13.0 per cent on 31 December 2022 to 12.7 per cent on 30 June 2023, with the CET1 ratio for Group 1 banks falling from 13.1 per cent to 12.9 per cent.
The weighted-average Net Stable Funding Ratio (NSFR) fell by 0.3 per cent to 124.1 per cent for the Group 1 banks and by 2.6 per cent to 124.0 per cent for the G-SIBs over this six-month period.
However, liquidity coverage had improved over this timeframe, with the Liquidity Coverage Ratio (LCR) for Group 1 banks rising from 137.3 per cent to 138.6 per cent, and from 134.4 per cent to 137.0 per cent for the G-SIBs.
Significantly, the BIS finds that profit after tax for large internationally active banks rose to a record 鈧�279 billion over the period.
With the final Basel III minimum capital requirements coming into play from 1 January 2023, the average impact of the fully phased in final Basel III framework was a rise of 4.9 per cent in Tier 1 minimum required capital (MRC) for Group 1 banks compared with +3.1 per cent for 31 December 2022.
Group 1 banks experienced a total regulatory capital shortfall of 鈧�4.0 billion on 30 June 2023, compared with a 鈧�3.0 billion shortfall at the end of December 2022, according to the recently released .
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