We have analysed the 2022 interim reports of 26 banks in 11 European countries to better understand the impact of macroeconomic uncertainties on Expected Credit Losses (ECL). This study is the fifth in its series and follows on our fourth edition of the report released in June 2022.
The Irish banks decreased their ECL allowance and coverage ratios in H1 2022, although they still take a more prudent approach when compared to their European peers. We are seeing relatively low weighting of economic uncertainty overlays, which although are justified, should still be closely monitored in subsequent quarters where macroeconomic situations may change rapidly.
Michael Tuohy Partner, Audit & Assurance
The study mainly focuses on the ECL-related impacts and covers:
Since the beginning of the year, several articles and speeches from the Central Bank of Ireland (CBI) have singled out the Payments Institutions (PI) and Electronic Money Institutions (EMI) sector as being of increased risk, with concerns that an operational or financial failure could cause a significantly impact the European Economic Area (EEA) financial system.
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