The Risk Assessment Reports provide an annual update on risks and vulnerabilities in the EU banking sector. They describe the main developments and trends that affect the EU banking sector and provide the EBA's outlook on the main micro-prudential risks and vulnerabilities.

Article 32 of the EBA's funding Regulation task the Authority with monitoring and assessing market developments and providing information to other EU institutions and bodies (European Parliament, Council, European Commission, ESRB) and the general public.

One of the quantities contained in the Risk Assessment Reports is NPL. A nonperforming loan (NPL) is a loan in which the borrower is default and hasn't made any scheduled payments of principal or interest for some time. In figure above is present the subdivision of impaired loans into the different overdue bands that provides further detailed information useful for the valuation of the loans themselves.

Starting from the analysis of these quantities and the indices constructed from these (for example, NPL Ratio) it is possible to have tools capable of monitoring the risk. In addition, it is possible to compare the main indicators with those of the banks involved in the EBA's Wide Transparency Exercise and with those of other European countries.

Dr.ssa Emanuela Lanzara