Risk Assessment Report - June 2026 (European Banking Authority)

Summary

• Lending to households and non-financial corporates rose by 2.7% in 2025, while exposures to non-bank financial institutions reached around 10% of total assets.p.4
• SME lending rose 2.9% YoY and consumer credit 4.7% YoY.p.14
• EU banks' non-EEA exposures stand at €4.9 trillion, up 4.3% YoY and nearly 17% of total assets.p.15
• Direct exposures to the Middle East are around €130 billion, less than 0.5% of total EU/EEA banking sector assets.p.15
• NPL volumes stabilised near their lowest levels at €370 billion, or 1.82% of total loans.p.22
• Euro area headline inflation is expected to rise from 2.1% in 2025 to 3.0%, driven largely by energy prices.p.6
• Lending to other EEA countries is expected to grow 6.6% for households and 7.0% for NFCs, above domestic growth of 3.5% and 4.9%.p.21

Key insights

1. Exposures to non-bank financial institutions, proxied by other financial corporations, increased by 10.4% YoY.p.14
2. Banks' exposures to sectors that highly contribute to climate change stand at €4.0 trillion, around 68% of total NFC exposures of €5.9 trillion.p.16
3. Exposures to electricity, gas and steam supply total €341 billion and are a key vulnerability channel.p.17
4. Domestic sovereign exposures account for 44.9% of banks' sovereign portfolios, other EEA sovereigns 30.8% and third countries 24.2%.p.18
5. SMEs remain the most vulnerable segment with an NPL ratio of 4.4%, while consumer credit stays at around 5.4%.p.22
6. The BIS suggests AI accounted for more than a third of private credit deals in 2025, up from 17% over the previous 5 years.p.8
7. Listed private credit vehicles offer dividend yields of around 13% but trade at around 80 to 85 cents on the dollar.p.25
8. Eleven banks have private credit related exposures exceeding 2% of their assets.p.28