After several years of intense pressure from the supervisors, important regulatory changes (IFRS 9, calendar provisioning, etc.), after the development of a NPL market, etc., where do EU banks stand in terms of asset quality and provisioning?
We believe, more than ever, that this is an important question, as there are growing concerns that this expansion cycle might soon end and that the benign cost of risk that many banks currently experience could revert.

In this note, we perform a new analysis of the provisioning shortfalls on the basis of EBA transparency data. We use this dataset because it is the only one which is both perfectly in agreement with the supervisors’ definitions of troubled assets and consistent from one bank to another. In order to allow for a consistent comparison, we use the exact same methodology as in 2016, 2017 and 2018 (see our previous works for details.)