Basel III capital and leverage ratios stable, liquidity improves for large banks

The Basel Committee on Banking Supervision's latest monitoring report shows stable Basel III risk-based capital and leverage ratios for banks. Large internationally active banks also recorded a slight increase in liquidity indicators as of June 30, 2025.

Capital ratios hold steady, liquidity improves

The Basel Committee's latest monitoring report, based on June 30, 2025 data, shows stable capital ratios and improved liquidity for large internationally active banks.

The average Common Equity Tier 1 (CET1) capital ratio for Group 1 banks held steady at 13.9%, consistent with December 2024.

The impact of the final Basel III framework on Tier 1 minimum required capital (MRC) for Group 1 banks and G-SIBs decreased by 1.1 and 0.5 percentage points, respectively, reflecting implementation progress.

Despite this, a cumulative capital shortfall of €1.0 billion persists under the fully phased-in final Basel III framework.

Furthermore, 14 G-SIBs reported an aggregate incremental shortfall of €3.2 billion against 2022 minimum total loss-absorbing capacity (TLAC) requirements.

Liquidity indicators improved, with the average Liquidity Coverage Ratio (LCR) for Group 1 banks increasing by 0.8% and the Net Stable Funding Ratio (NSFR) rising by 1.1% compared to the previous period, driven by lower net outflows and a more balanced funding structure.

Regional shifts and implementation gains

A balanced data set for Group 1 banks shows a 0.1% increase in current Basel III capital ratios by June 2025, with overall CET1 capital ratios reaching 14.1%.

This growth was driven by Tier 1 capital expanding more significantly than risk-weighted assets.

Regionally, Europe's Tier 1 capital ratios are currently higher than in the Americas and the rest of the world, a reversal from the 2011-2014 period, with the 'rest of the world' region contributing a 2.7% rise in H1 2025.

The report also highlights a reduced projected impact from the final Basel III standards on Group 1 banks.

Following full phase-in, Tier 1 minimum required capital (MRC) is expected to increase by 1.7%, a decrease from prior estimates.

This improvement is attributed to implementation progress, where increased risk-based requirements (2.6%) are partly offset by a 0.9 percentage point reduction in leverage ratio requirements.