UK Banking Sector Capital Ratios Decrease in 2025 Q1

Strategic Insights -

The Bank of England has issued a statistical release detailing the UK banking sector's capital ratios and levels of capital and risk-weighted assets for 2025 Q1. The key points from the release indicate a decrease in the Common Equity Tier 1 (CET1) capital ratio, as well as a decrease in the level of CET1 capital and an increase in the level of total risk-weighted assets. This release provides a comprehensive overview of the UK banking sector's capital ratios and highlights the importance of these metrics in assessing the sector's overall health.

Key Takeaways:

  • The CET1 capital ratio for the UK banking sector decreased by 0.4 percentage points to 15.5% in 2025 Q1.
  • The level of CET1 capital decreased by 1.3% on the quarter, from £468bn to £462bn.
  • The level of total risk-weighted assets increased by 1.3% from £2,940bn to £2,977bn this quarter.
  • Table A provides a comprehensive breakdown of the capital ratios and levels of capital and risk-weighted assets for the UK banking sector across different quarters.
  • Chart 1 and Chart 2 visualize the capital ratios and contributions to the quarterly change in total capital ratio, respectively.
  • Table B provides a detailed breakdown of risk-weighted assets by risk type, highlighting the distribution of total risk-weighted assets across different categories.
  • Chart 3 compares the changes in risk-weighted assets by risk type.
  • Chart 4 and Table C provide a comparison of published capital ratios for the UK, highlighting the differences in datasets and methodologies used by the Bank of England and the International Monetary Fund.

Statistics:

  • CET1 capital ratio decreased by 0.4 percentage points to 15.5% in 2025 Q1.
  • €462bn decrease in CET1 capital on the quarter.
  • £475bn increase in total risk-weighted assets on the quarter.
  • £228bn decrease in Tier1 capital on the quarter.
  • £527bn decrease in Tier2 capital on the quarter.
  • Risk-weighted assets increased by 1.3% from £2,940bn to £2,977bn this quarter.

Sources:

  • Bank of England, "Banking Sector Regulatory Capital Statistical Release", Table A, Table B, Table C, Chart 1, Chart 2, Chart 3, and Chart 4.
  • International Monetary Fund, "UK Banking Sector Capital Ratios Comparison".
  • Financial Policy Committee's (FPC) indicators footnote.[1]