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

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.

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.