Comments on banking system developments in the first half of 2023

Published: 29/8/2023

In the first half of 2023, total assets of credit institutions dropped 2.6% from the end of 2022 and stood at EUR 74.0bn. Assets dropped in most credit institutions.

As a result of the fall in non-performing loans (‘NPLs’) and total loans and advances of 6.1% and 5.4%, respectively, the share of NPLs in total loans and advances held steady at 3.0% at the end of the first half of 2023, relative to the end of 2022. The main factor influencing the fall in total loans and advances was the fall in total deposits with the central bank. NPLs fell the most in the portfolio of loans to non-financial corporations where their share in loans fell from 6.4% to 5.6%. The portfolio of household loans also saw a fall in the amount of NPLs, with their share falling from 5.0% to 4.6% of loans to that sector.

The operations of credit institutions generated EUR 703.8m in profit in the first half of 2023. Profitability indicators rose from the end of 2022. The return on assets (ROA) thus rose from 1.0% to 1.9% and return on equity (ROE) rose from 8.2% to 16.8%.

The key indicators of banking system capitalisation remained high, with the banking system total capital ratio standing at 23.2%. All credit institutions boasted total capital ratios in excess of the minimum prescribed of 8%.

Credit institutions' liquidity measured by the liquidity coverage ratio (LCR) also remained very high. At the end of the first half of 2023, all credit institutions met the prescribed minimum liquidity requirements, with the average LCR standing at 233.7%.

Supervisory indicators