The European Banking Authority (EBA) has released its fourth quarter 2025 Risk Dashboard, reporting that banks across the EU and EEA are maintaining strong capital levels, steady liquidity, and good asset quality.
The findings come amid increased global volatility linked to renewed conflict in the Middle East.
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For Q4 2025, the EBA published its dashboard together with new reporting under the Capital Requirements Regulation/Directive (CRR3/CRD6), replacing the Basel 3 monitoring report.
The data shows that EU/EEA banks’ direct financial exposures to Middle Eastern counterparties totalled €132bn ($152.9bn) by the end of 2025.
This figure includes approximately €47bn in loans and advances to other banks and financial firms, and around €33bn to non-financial corporations.
Such exposures make up less than 0.5% of total bank assets in the region.
The EBA noted, however, that any escalation in regional tensions could indirectly affect EU banks through energy price rises, inflation, slower economic growth, and supply chain issues, especially for sectors such as transport, construction, and certain manufacturing areas that are energy intensive.
Key sector metrics remained largely unchanged.
Risk-weighted assets rose by just over 1% year-on-year to reach €10.2tn by Q4.
The transitional common equity tier 1 (CET1) ratio stayed at 16.3%.
Return on equity remained robust at 10.4%, only marginally below the 2024 December’s 10.5%.
Net interest margin (NIM), which had dropped from 1.66% at end-2024 to 1.58% by September 2025, suggesting a possible stabilisation after recent declines.
The cost-to-income ratio climbed to its highest level since March 2023 due to both rising expenses and typical seasonal effects.
Total banking sector assets held steady at €29.1tn in Q4.
Loans outstanding increased more than 1%, mainly because of new lending backed by residential property and additional financing for small and medium-sized businesses.
Customer deposits continued to be a focus of funding strategies: household deposits grew by 1.8% and non-financial corporate deposits by 3.6% during the quarter, offsetting reduced deposits from other banks and central banks.
