EU/EEA banks remain resilient amid rising geopolitical, market and technological risks

The European Banking Authority (EBA) published its Spring 2026 Risk Assessment Report (RAR), Q1 2026 Risk Dashboard (RDB) and Spring 2026 Risk Assessment Questionnaire (RAQ) results today. 

The findings show that EU/EEA banks continue to operate from a position of strength, supported by solid capital and liquidity, strong asset quality and sustained profitability. Funding conditions also remain broadly favourable despite increased uncertainty in financial markets. Leveraging on funding plan data and outlooks, the report provides a comprehensive view of banks’ lending activity, balance sheet developments, funding strategies and profitability prospects.

EU/EEA banks face a challenging and rapidly evolving risk environment. Despite the strong starting point, the risk environment remains challenging and rapidly evolving, requiring continued vigilance. Heightened geopolitical tensions, including the conflict in the Middle East, have increased uncertainty and could affect banks through higher energy prices, renewed inflationary pressures, weaker economic activity and increased market volatility. While EU/EEA banks' direct exposures to the affected regions remain limited, indirect and second-round effects could have broader implications for borrowers, funding conditions and financial markets.

There are rising operational and cyber risks in a digital environment. Operational and cyber risks are key concerns for the banking sector. The growing digitalisation of financial services, wider adoption of advanced technologies, including artificial intelligence, and an evolving cyber threat landscape. The rapid development of increasingly capable (frontier) AI models may further amplify operational and cyber risks, including through new attack vectors and the potential misuse of AI-enabled tools. This further underlines the importance of maintaining strong operational resilience, cybersecurity controls and contingency planning.

Interconnectedness with NBFIs and private sector remain a concern. The EBA further points to the continued expansion of private credit markets and the growing interconnectedness between banks and non-bank financial institutions. Exposures of EU/EEA banks towards NBFIs increased notably in recent quarters. While exposures towards private credit are estimated to be limited, they are concentrated in larger institutions. Although private credit provides an important source of financing to the real economy, its expansion warrants close monitoring given potential risk transmission channels through funding relationships, common exposures and competitive pressures in lending markets.

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