The key points for 2023 Q1:
- The Common Equity Tier 1 (CET1) capital ratio for the UK banking sector decreased by 0.3 percentage points on the quarter to 15.8%.
- The level of CET1 capital decreased by 1.7% on the quarter, from £473bn to £465bn.
- The level of total risk-weighted assets remained at £2,941bn this quarter.
Table A: Capital ratios and levels of capital and risk-weighted assets in the UK banking sector (a)
|
2022 Q1 |
2022 Q2 |
2022 Q3 |
2022 Q4 |
2023 Q1 |
|
One quarter |
Four quarters |
|
|---|---|---|---|---|---|---|---|---|
|
|
Ratios (per cent) |
Change (percentage points) |
||||||
|
Total capital |
20.1 |
20.5 |
20.6 |
21.4 |
21.2 |
-0.2 |
1.1 |
|
|
Tier1 |
17.3 |
17.6 |
17.8 |
18.4 |
18.3 |
-0.1 |
1.0 |
|
|
CET1 |
15.3 |
15.5 |
15.7 |
16.1 |
15.8 |
-0.3 |
0.5 |
|
|
|
Values (£ billions) |
Change (per cent) |
||||||
|
Total capital |
587 |
616 |
644 |
629 |
622 |
-1.1 |
6.0 |
|
|
of which: Tier1 |
506 |
531 |
557 |
542 |
538 |
-0.7 |
6.3 |
|
|
of which: CET1 |
447 |
468 |
490 |
473 |
465 |
-1.7 |
4.0 |
|
|
of which: Tier2 |
81 |
85 |
86 |
86 |
85 |
-1.2 |
4.9 |
|
|
Risk-weighted assets |
2,919 |
3,010 |
3,132 |
2,941 |
2,941 |
0.0 |
0.8 |
|
Chart 1: Capital ratios for the UK banking sector
Chart 2: Contributions to quarterly change in total capital ratio (a) (b)
Footnotes
- (a) See Further details about these data for information on the calculation of these contributions.
- (b) Data for all charts has been sourced from the banking sector regulatory capital data tables.
Table B: Risk-weighted assets by risk type (£ billions) (a)
|
2022 Q1 |
2022 Q2 |
2022 Q3 |
2022 Q4 |
2023 Q1 |
|
One quarter |
Four quarters |
|
|---|---|---|---|---|---|---|---|---|
|
Values (£ billions) |
Change (per cent) |
|||||||
|
Total risk-weighted assets |
2,919 |
3,010 |
3,132 |
2,941 |
2,941 |
0.0 |
0.8 |
|
|
Credit and counterparty risk |
2,117 |
2,182 |
2,273 |
2,138 |
2,149 |
0.5 |
1.5 |
|
|
Market risk |
404 |
418 |
430 |
384 |
384 |
0.0 |
-5.0 |
|
|
Operational risk |
290 |
304 |
316 |
313 |
312 |
-0.3 |
7.6 |
|
|
Credit Valuation Adjustment |
73 |
79 |
87 |
81 |
74 |
-8.6 |
1.4 |
|
|
Other |
36 |
27 |
26 |
25 |
21 |
-16.0 |
-41.7 |
|
Footnotes
- (a) The categories of risk-weighted assets used are as defined in the reporting templates in the annexes to the Implementing Technical Standards (ITS) on Supervisory Reporting (Regulation (EU) No 573/2013).
Chart 3: Changes in risk-weighted assets by risk type
Comparison of capital ratios with other publications
Capital ratios for the UK banking sector are published by the Bank of England (BoE) and the International Monetary Fund (IMF). Chart 4 shows a comparison of published capital ratios for the UK and the details of their differences are explained below. Table C provides descriptions of the underlying datasets and links to their definitions.
Chart 4: Comparison of published capital ratios for the UK (a)
Footnotes
- (a) From 1 January 2022, regulatory changes, designed to strengthen the capital framework, were introduced which had an impact on firms’ capital and risk-weighted assets. This included more prudent approaches to the calculation of risk-weighted assets and the treatment of intangible software assets for regulatory capital. These changes are described in more detail in the December 2021 Financial Stability Report.
From the 2023 Q1 release, Chart 4 has been amended to remove the EBA’s Key Risk Indicator. Since 1 January 2021, after the end of the transition period on 31 December 2020, the EBA risk dashboard ceased to include data for UK banks. These data have been removed now that UK banks are no longer part of this collection.
The effects of the differences in datasets and methodologies can be generalised as follows:
- Firm coverage – the BoE and the IMF publish capital ratios that represent averages of the total UK banking sector. While they all use the same data, the IMF publications are updated with a lag. This means that the latest quarterly figures are not available at the time of this publication and may include minor differences because this release’s chart is not using the latest vintage at this point of publication. The Financial Policy Committee’s (FPC) indicatorsfootnote [1] cover major UK banksfootnote [2] only, rather than the total UK banking sector, and this generally has a downward effect on the ratio.
- Use of transitional or endpoint capitalfootnote [3] – the use of endpoint capital will tend to have a slight downward effect on ratios, compared to those using transitional capital.
- Timing – both timeliness and frequency vary across datasets. The banking sector regulatory capital statistical release and FPC indicators are the timeliest.
Table C: Description of different published capital ratios for the UK
|
Publishing institution |
Dataset |
Firm coverage |
Transitional or endpoint capital |
Averaging method |
|---|---|---|---|---|
|
Bank of England |
Banking sector regulatory capital |
Total UK banking sector |
Transitional |
Weighted mean |
|
International Monetary Fund |
Total UK banking sector |
Transitional |
Weighted mean |
|
|
Bank of England |
Major UK Banks |
End-point(a) |
Weighted mean |
Footnotes
Next release – 29 September 2023.
-
Prior to December 2020 the FPC published a CET1 capital ratio as its Core Indicator for risk-based capital. Since December 2020 the Core Indicator has been Tier 1 capital.
-
The group currently includes Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest, Santander UK, Standard Chartered and Virgin Money. Note, Virgin Money are only included from 2020 Q4 onwards.
-
See explanatory notes for more detail.
