The European Banking Authority (EBA) published the annual update on the funding plans of banks in EU. The assessment in this report helps bank supervisors in EU to assess the sustainability of the main sources of funding at banks. The results of the assessment show the impact the pandemic had on the funding composition of banks and conclude that funding plans of banks in EU are poised to gradually return to a pre-pandemic funding composition by 2023; this implies a partial replacement of the central bank funding with market-based funding. The report is based on data submissions of banks in accordance with the EBA guidelines on funding plans. European Public Prosecutor’s Office to fight fraudsters willing to cheat with public funds.
160 banks submitted their funding plans for a forecast period of three years (2021 to 2023). Banks’ total assets increased by 8% in 2020, mainly driven by a surge in cash balances at central banks because of central bank support measures introduced in response to the pandemic. While loan growth was sluggish in 2020, banks expect loans to non-financial corporates (NFCs) and to households to grow by 4% per year over the forecast period 2021 – 2023.
Data also shows that the spread between interest rates for client deposits and for loans to clients declined in 2020 and is expected to decline further in 2021. Despite the market turbulence in the first half of 2020, banks reported a decline in their market-based funding costs in 2020. In 2021, most banks expect funding conditions to remain very benign and costs to decline even further.
You can find EBA’s Funding Plans Report here.
Source: eba.europa.eu