Financial reporting of European banks: benchmark study H1 2023

We have analysed the 2023 interim reports of 26 banks in 11 European countries to better understand the impact of financial turbulence and ongoing geopolitical crises on their Expected Credit Losses. This study is the seventh in its series and follows on from previous editions of the report since its launch in 2020.

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A focus on Expected Credit Losses

The study mainly focuses on the ECL-related impacts, with key findings on:

• ECL charge impact of H1 2023 on the profit or loss and ECL allowances
• ECL allowances: changes in coverage ratios and allocation between stages
• Post-model adjustments/overlays
• Forward looking information

In the following, our Senior Manager Heike Hartenberger provides a contextualisation of the report for the German market:

„Not only European banks continue to find themselves in a turbulent macroeconomic environment. As our study also shows, the Expected Credit Loss (ECL) model of IFRS 9 continues to prove its worth in these times. The generation of macroeconomic scenarios and forward-looking information continues to pose challenges. The ECL model does not specify a particular method. It gives banks the scope necessary to take uncertainties into account, to generate and weight different scenarios. The study shows heterogeneity not only in the individual scenarios and their weighting but also in the reporting on their use in the ECL model.“