, 16 tweets, 5 min read Read on Twitter
As you (probably don't) know, I do every year an analysis of the #NPL of EU #banks and the trends that appear in the EBA Transparency data (the only consistent dataset on EU banks.) Again this year the results are very interesting.
First of all an important disclaimer: this is *not* investment advice, i could be totally wrong and please don't rely on anything I say. 2/n
this being said, the most striking thing in the data is that THE BIG DELEVERAGING IS OVER. Yes, banks are lending again. Here's a scatter plot showing the size of the loan books 2018 (y-axis) vs 2017 (x-axis): pretty uniform and healthy growth across the board. 3/n
The next big macro data point is that all metrics are improving : NPE ratios, NPE coverages, Texas ratios, even CET1 ratios. Everything is flashing green - clearly the pressure of the SSM is doing something. 4/n
Of course, the size of the problem is still large: the EU aggregate number (banks within the EBA sample) is 746bn€ of gross NPE, 994bn of gross "Problem loans" (the second category is my own definition.) But still, it's sharply going down (-16% this year) 5/n
That's all good, but i know you don't give a damn about this, all you want to know is which bank is the next going bust, you evil people 😃. Well of course I don't know. But i've built a tool that tries to spot which banks haven't provisioned enough on their NPL 6/n
Historically this has performed really decently, so I'm doing it this year again. AGAIN I COULD BE BADLY WRONG AND DON'T RELY ON ANYTHING I SAY TO INVEST. thanks. 7/n
So what does this say? Funnily, there are now only four countries where there is one (or more) bank with a shortfall (estimated by me) above 3% of RWA: that's Greece (no scoop), Malta (one bank, and i'm not surprised it's there...) and 8/n
And... Norway and Germany ! No Italian, no Spanish, no Cypriot, no Irish, no Portuguese etc. If all you do is causally read the news, that might come as a surprise but actually I'm not: banks in the periphery have done a *huge* effort and this has paid off. 9/n
I won't give names here but the culprits are two mid-size german banks which are clearly in trouble (and it's been flagged well enough), one ok-ish german Landesbank, two small Norwegian banks, two big greek banks 10/n
That bank in Malta & (sorry I forgot to mention it), a small Danish bank. All the Italian, Irish or Portuguese banks have done such huge efforts that I'm much less worried about them. Even #Carige is doing ok (but ofc their real problem is that they don't make money at all). 11/n
In Portugal, there's only one bank which is (reasonably) in trouble on that metric. In Ireland or Spain there's no real issue (but beware, the Spanish risk comes more from foreclosed assets which are not analysed here). 12/n
Last but not least, here's a scatter plot of the "problem banks", i.e. banks that had a 2%+ shortfall in 2017. As you can see, almost all banks there have improved and in most cases the improvement is substantial. 13/n
Bottom line: it's time German politicians focused on their own banks instead of endlessly asking for "risk reduction" before implementing EDIS !!
@borghi_claudio this might interest you
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