Austria: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis

While the ongoing Middle East conflict is weighing on the outlook, the Austrian financial sector has remained resilient in recent years in the context of domestic and international headwinds. Despite two years of a broad-based recession in 2023 and 2024, rising NPLs in particular in the commercial real estate segment until recently, the materialization of geopolitical risks and tighter monetary policy constraining demand, the banking system’s capitalization has continued to improve. The aggregate Common Equity Tier 1 capital ratio (CET1) reached 18.4 percent in September 2025, from 17.9 percent at the end of 2024. This reflects continued strong profitability in recent years, in particular from net interest margins driven by foreign activities. While profitability has declined since its peak in 2023, it remained relatively high with a return on equity at 8.9 percent in percent in 2025. Liquidity buffers are high, with weighted Liquidity Coverage Ratio (LCR) of 185 percent and an aggregate Net Stable Funding Ratio (NFSR) of 134.8 percent in September 2025. Less Significant Institutions (LSIs) have on aggregate higher capital ratios and higher liquidity buffers than Significant Institutions (SIs).