Financial reporting of European banks: benchmark study 2024

Key findings

• ECL Charge Impact: Analysis of the year-end 2023 ECL charge impact on profit or loss and ECL allowances.
• Coverage Ratios and Stage Allocation: Examination of changes in coverage ratios and allocation between different stages across various institutions.
• Post-Model Adjustments (PMAs): Assessment of the share of post-model adjustments in the total ECL.
• Forward-Looking Information: Integration of macroeconomic forecasts into forward-looking information.
• Irrevocable Payment Commitments (IPCs): Exploration of IPCs to the Single Resolution Board as a side topic.

Irish banks specifics

• ECL Coverage Ratio: The ECL coverage ratio for amortized cost (AC) loans decreased from 1.40% in 2022 to 1.36% in 2023. Irish banks specifically saw a reduction in their coverage ratios, now at 1.5% and 2.2% compared to year-end 2022, nevertheless still above the average.
• Stage 3 ECL Coverage: Irish banks demonstrated a decrease in Stage 3 ECL coverage ratios, while changes in Stage 1 and Stage 2 ratios did not follow a clear pattern.
• Loan Allocation: Irish banks still allocate fewer loans to Stage 1 compared to their peers, with a higher proportion of loans categorized under Stage 2 and Stage 3.
• GDP Growth Projections: All participating banks, including those in Ireland, anticipate optimistic GDP growth in the coming years, aligning closely with ECB projections and exceeding those of the BoE.
• Overlays in ECL Allowances: The average weight of cumulative overlays in final ECL allowances stands at 12% for year-end 2023, down from 14% in 2022. Irish banks exhibit varying approaches to PMAs, with overlays accounting for 7% to 35% of total ECL.
• Scenario Weightings: Irish banks tend to adopt a conservative approach to scenario weightings, with downside scenarios weighted at 40% and 35%, higher than most peers.

Learn more

For a detailed analysis, you can download the full "Financial Reporting of European Banks – Benchmark Study YE 2023" here.