European Banks' Cost of Risk Supported by Loan Loss Releases in Q3

DBRS Morningstar has released a commentary on the Cost of Risk (CoR) of banks in Europe in Q3 2021 and 9M 2021, including banks in France, Germany, Italy, the Netherlands, Spain, Sweden, Norway, Portugal, Denmark, Finland, Belgium and the United Kingdom (UK).

Key highlights from DBRS Morningstar's commentary include:

European banks showed generally lower levels of CoR with most banks reporting either lower levels or releases of provisions, although the latter were lower than in Q2.

In Q3 2021, European banks followed broadly similar provisioning trends as in H1 2021.

"European banks reported lower levels of Cost of Risk (CoR) in Q3 for the fifth consecutive quarter supported by releases of provisions, similar to H1 2021, but we note that on average the releases were lower than in the previous quarter although some banks reported releases of loan loss provisions for the first time this quarter. The CoR for 9M 2021 was below FY2019 levels and significantly below FY2020, however we do expect banks' CoR to increase in coming quarters, as we will likely start seeing the impact of the end of moratoria and other support measures" said Maria Rivas, Senior Vice President, Global Financial Institutions at DBRS Morningstar.