Banking sector regulatory capital - 2024 Q1

Published on 28 June 2024

The key points for 2024 Q1:

The Common Equity Tier 1 (CET1) capital ratio for the UK banking sector has decreased by 0.2 percentage points to 15.7%.
The level of CET1 capital increased by 0.6% on the quarter, from £462bn to £465bn.
The level of total risk-weighted assets increased by 2.2% from £2,898bn to £2,963bn this quarter.

	2023 Q1	2023 Q2	2023 Q3	2023 Q4	2024 Q1	One quarter	Four quarters
	Ratios (per cent)					Change (percentage points)
Total capital	21.2	21.1	21.1	21.2	20.9	-0.3	-0.3
Tier1	18.3	18.2	18.2	18.3	18.0	-0.2	-0.2
CET1	15.8	15.9	15.9	15.9	15.7	-0.2	-0.1
	Values (£ billions)					Change (per cent)
Total capital	623	616	625	614	620	1.0	-0.5
of which: Tier1	538	532	539	530	535	0.9	-0.6
of which: CET1	465	463	471	462	465	0.6	0.0
of which: Tier2	85	84	85	84	85	1.2	0.0
Risk-weighted assets	2,941	2,918	2,963	2,898	2,963	2.2	0.7

(a) Figures throughout this document may not correspond exactly due to rounding.

Lines represent the total capital ratio, Tier 1 and CET 1 ratio of the UK banking sector over the past 18 quarters. All the three ratios have decreased in 2024 Q1.

Bars represent contributions made by the quarterly percentage changes in the levels of risk-weighted assets (RWAs), tier 1 and tier 2 capital on the quarterly percentage change in total capital ratio over the past six quarters. The impact of an increase in the Tier 1 level was offset by a larger increase in total RWAs which resulted in an overall decrease to the total capital ratio in 2024 Q1.

(a) See Further details about these data for information on the calculation of these contributions.
(b) Data for all charts has been sourced from the banking sector regulatory capital data tables.

names	2023 Q1	2023 Q2	2023 Q3	2023 Q4	2024 Q1	One quarter	Four quarters
	Values (£ billions)					Change (per cent)
Total risk-weighted assets	2,941	2,918	2,963	2,898	2,963	2.2	0.7
Credit and counterparty risk	2,149	2,119	2,155	2,124	2,163	1.8	0.7
Market risk	384	397	395	366	379	3.6	-1.3
Operational risk	312	309	317	326	334	2.5	7.1
Credit Valuation Adjustment	74	77	77	71	69	-2.8	-6.8
Other	21	16	19	12	17	41.7	-19.0

(a) The categories of risk-weighted assets used are as defined in the reporting templates in the annexes to the Implementing Technical Standards (ITS) on Supervisory Reporting (Regulation (EU) No 573/2013).

Bars represent the breakdown of quarterly changes in the levels of risk-weighted assets (RWAs) by type over the past six quarters. There has been an increase across most of the published risk types within RWAs, except for credit valuation adjustment which decreased. This had resulted in an overall increase of total RWAs.

Comparison of capital ratios with other publications

Capital ratios for the UK banking sector are published by the Bank of England (BoE) and the International Monetary Fund (IMF). Chart 4 shows a comparison of published capital ratios for the UK and the details of their differences are explained below. Table C provides descriptions of the underlying datasets and links to their definitions.

Chart shows capital ratios for the UK banking sector published by different institutions. These ratios are similar but not identical due to differences in firm coverage and data revisions.

(a) From 1 January 2022, regulatory changes, designed to strengthen the capital framework, were introduced which had an impact on firms’ capital and risk-weighted assets. This included more prudent approaches to the calculation of risk-weighted assets and the treatment of intangible software assets for regulatory capital. These changes are described in more detail in the December 2021 Financial Stability Report.

The effects of the differences in datasets and methodologies can be generalised as follows:

Firm coverage – the BoE and the IMF publish capital ratios that represent averages of the total UK banking sector. While they all use the same data, the IMF publications are updated with a lag. This means that the latest quarterly figures are not available at the time of this publication and may include minor differences because this release’s chart is not using the latest vintage at this point of publication. The Financial Policy Committee’s (FPC) indicators^{footnote [1]} cover major UK banks^{footnote [2]} only, rather than the total UK banking sector, and this generally has a downward effect on the ratio.
Use of transitional or endpoint capital^{footnote [3]} – the use of endpoint capital will tend to have a slight downward effect on ratios, compared to those using transitional capital.
Timing – both timeliness and frequency vary across datasets. The banking sector regulatory capital statistical release and FPC indicators are the timeliest.

Publishing institution	Dataset	Firm coverage	Transitional or endpoint capital	Averaging method
Bank of England	Banking sector regulatory capital	Total UK banking sector	Transitional	Weighted mean
International Monetary Fund	Financial soundness indicators	Total UK banking sector	Transitional	Weighted mean
Bank of England	FPC indicators	Major UK Banks	End-point^(a)	Weighted mean

(a) From 2018, Basel III CET 1 and Tier 1 capital ratios reflect IFRS 9 transitional arrangements.

Next release – 30 September 2024

Copyright guidance and the related UK Open Government Licence.

In July 2023 the FPC added the CET1 ratio as one of its Core indicators, alongside the Tier 1 ratio.
The group currently includes Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest, Santander UK, Standard Chartered and Virgin Money. Note, Virgin Money are only included from 2020 Q4 onwards.
See explanatory notes for more detail.