Financial reporting of European banks in the context of Covid-19: June 2021 update

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2021 financial reporting of European banks study

How did Covid-19 affect the 2021 half-year results of European banks?

We have analysed the 2021 interim reports of 26 banks in 11 European countries to better understand the impact of Covid-19 on their financial performance in H1 2021. This study is the third in its series and follows on our second edition of the report released in May 2021.

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Key findings

  • In the first half of 2021, all banks in the sample present a significant decrease in their ECL charge compared to the same period in 2020.
  • Most of the banks that experienced the highest increase in ECL charges last year are now among those with a net ECL profit in the first half of 2021.
  • 100% out of 18 banks that disclosed their amounts both in H1 2021 and YE 2020 have a cumulated overlay that is an ECL charge.
  • The change in overlays represents on average 54% in ECL profit or loss before overlays in absolute value.
Vincent Guillard

In our reports, we aim to share emerging information on the impacts of Covid-19 on the expected credit losses disclosed by a selection of 26 European banks. Our latest findings show a significant decrease of the ECL charge in P&L and the increasing weight of post-model adjustments, also called overlays. We will continue to monitor ECL-related indicators as the 2021 annual reports become available.

Vincent Guillard Partner

Read the report below to find out more. 

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Financial reporting of European banks: June 2021 update
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Financial performance of European banks 2021 study

How is the pandemic affecting the financial performance of European banks? The Covid-19 crisis continues to undermine global financial stability. While its full impact on the banking sector is yet to be determined, the 2020 annual results let us build a picture of the Covid-19 impact on the expected credit losses (ECL) in banks’ financial disclosures.

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