ECB publishes supervisory banking statistics for the third quarter of 2020

European Central Bank (ECB) has just publishes supervisory banking statistics for the third quarter of 2020.

• Main figures Capital ratios of significant institutions increase in third quarter of 2020, with aggregate total capital ratio standing at 19.05% (up from 18.66% in second quarter of 2020)

• Aggregate NPL ratio falls to 2.82% – lowest level since data first published in 2015

• Annualised return on equity bounces back to stand at 2.12% (up from 0.01% in second quarter of 2020, but down from 5.83% in third quarter of 2019)

• Liquidity coverage ratio rises to 170.94% (up from 165.52% in second quarter of 2020)

• Leverage ratio increases to 5.63% in the third quarter of 2020 (up from 5.33% in second quarter of 2020)

Leverage

The aggregate leverage ratio (transitional definition) rose to 5.63% in the third quarter of 2020, up from 5.33% in the previous quarter.

That increase was driven by a 5.6% reduction in total exposure (the denominator in the leverage ratio), which fell from €25,016 billion in the second quarter of 2020 to €23,611 billion in the third quarter.

It is worth noting in this regard that on 17 September 2020 the ECB announced that banks supervised directly by the ECB were allowed to exclude certain central bank exposures from their leverage ratios