Key points:
- The Common Equity Tier 1 (CET1) capital ratio for the UK banking sector decreased by 1.5 percentage points on the quarter to 15.3%.
- The level of CET1 capital decreased by 3% on the quarter, from £461bn to £447bn.
- There was a 6.2% increase in total risk-weighted assets on the quarter, from £2,749bn to £2,919bn.
Table A: Capital ratios and levels of capital and risk-weighted assets in the UK banking sector (a)
2021 Q1 | 2021 Q2 | 2021 Q3 | 2021 Q4 | 2022 Q1 |
| One quarter | Four quarters | |
|---|---|---|---|---|---|---|---|---|
| Ratios (per cent) | Change (percentage points) | ||||||
Total capital | 21.3 | 21.6 | 21.8 | 22.1 | 20.1 | -1.9 | -1.2 | |
Tier1 | 18.4 | 18.6 | 18.8 | 19.1 | 17.3 | -1.8 | -1.0 | |
CET1 | 16.1 | 16.4 | 16.5 | 16.8 | 15.3 | -1.5 | -0.8 | |
| Values (£ billions) | Change (per cent) | ||||||
Total capital | 594 | 600 | 611 | 606 | 587 | -3.1 | -1.2 | |
of which: Tier1 | 512 | 517 | 527 | 525 | 506 | -3.6 | -1.2 | |
of which: CET1 | 448 | 454 | 463 | 461 | 447 | -3.0 | -0.2 | |
of which: Tier2 | 83 | 83 | 83 | 81 | 81 | 0.0 | -2.4 | |
Risk-weighted assets | 2,787 | 2,774 | 2,801 | 2,749 | 2,919 | 6.2 | 4.7 | |
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)
2021 Q1 | 2021 Q2 | 2021 Q3 | 2021 Q4 | 2022 Q1 |
| One quarter | Four quarters | |
|---|---|---|---|---|---|---|---|---|
Values (£ billions) | Change (per cent) | |||||||
Total risk-weighted assets | 2,787 | 2,774 | 2,801 | 2,749 | 2,919 | 6.2 | 4.7 | |
Credit and counterparty risk | 2,018 | 2,012 | 2,032 | 1,973 | 2,115 | 7.2 | 4.8 | |
Market risk | 381 | 379 | 384 | 397 | 404 | 1.8 | 6.0 | |
Operational risk | 286 | 288 | 291 | 287 | 290 | 1.0 | 1.4 | |
Credit Valuation Adjustment | 75 | 69 | 72 | 67 | 73 | 9.0 | -2.7 | |
Other | 28 | 26 | 22 | 24 | 37 | 54.2 | 32.1 | |
Comparison of published capital ratios for the UK and the EU
Capital ratios for the UK banking sector are published by a number of organisations; the Bank of England (BoE), the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Banking Authority (EBA). These ratios are not identical due to differences in firm coverage, use of transitional or endpoint capital, method of averaging and data revisions as explained below. Chart 4 shows a comparison of published capital ratios for the UK in the panel on the left with EU average ratios published by the EBA in the panel on the right. Table C provides descriptions of the underlying datasets and provides links to their definitions.
The effects of the differences in datasets and methodologies can be generalised as follows:
- Firm coverage – the BoE, the ECB and the IMF publish capital ratios that represent averages of the total UK banking sector. While they all use the same data, the ECB and IMF publications are less timely and may include minor differences when compared with BoE data due to revisions. EBA aggregate statistical data exclude designated investment firms that are subsidiaries of banks headquartered outside the UK. 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. The EBA publish tables showing average capital ratios for a sample of EU banks, including UK banks, which have been included in Chart 4 for comparison. While they also publish charts showing UK ratios, the data behind these charts are not currently available for publication in this release.
- Averaging method – the EBA Risk Dashboard presents key risk indicators as percentiles (medians shown in Table C) rather than as weighted means, which will tend to have an upward effect.
- 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. The EBA aggregate statistical data are published annually while all other datasets are published quarterly.
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 | Mean |
European Central Bank | Total UK banking sector | Transitional | Mean | |
International Monetary Fund | Total UK banking sector | Transitional | Mean | |
Bank of England | Major UK Banks | End-point(b) | Mean | |
Bank of England | UK credit institutions | Transitional | Mean | |
European Banking Authority | EU banking sector | Transitional | Median |
(a) From Q1 2020, following the UK’s departure from the EU on 31 January 2020 (i.e. the beginning of the transition period), ECB ceased publication of consolidated banking data for the United Kingdom.
(b) From 2018, Basel III Tier 1 capital ratios reflect IFRS 9 transitional arrangements as agreed in European law.
(c) Prior to the reporting period Q1 2020 the EU aggregates included the sample of UK banks (see EBA Risk Dashboard) in the time series. Following the UK’s departure from the EU on 31 January 2020 (i.e. the beginning of the transition period), for the reporting periods Q1 2020 to Q4 2020 the risk indicators for the sample of UK banks were excluded from the EU aggregates, but where appropriate the aggregated UK risk indicators were reported separately. From 1 January 2021, after the end of the transition period on 31 December 2020, the EBA risk dashboard ceased to include such data for UK banks.
Next release: 14 October 2022
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.
