The European Banking Authority has published an update to its periodic 'risk dashboard,' summarising the main risks and weaknesses in the European Union's banking sector.

The EBA bases its findings on the basis of the evolution of 'key risk indicators' from 55 banks for the third quarter of 2014.

This latest edition of the risk dashboard is the first to have balance sheet information based on the supervisory reporting standards from FINREP, the Financial Reporting system for financial institutions throughout the EU.

The information confirms the positive trend of EU banks' capital positions, with the Common Equity Tier 1 (CET1) ratio reaching 12.1 per cent in Q3 2014 (11.8% in Q2). This is the highest level since 2009 and it was caused by an increase in retained earnings and capital issuances. Non-performing loans remained stable but still generally very high, despite divergences across banks. The EBA is therefore stressing the need for the continuous monitoring of credit quality, accompanied by consistent transparency for banks' exposures.

Profitability levels remain volatile and predominantly at low levels throughout the sector. Returns continue by and large to be subdued, being severely affected by the weak macroeconomic environment, the clean-up of some major banks' balance sheets, and the cost of litigation.

The dashboard also shows that balance sheets' structures continue to shift towards less indebtedness with the loan-to-deposit ratio at an all-time low of 109.3%.

Similarly, the share of customer deposit to total liabilities is at 49.2%, a record high for the available data. Total assets are also on the rise.

The risk dashboard is part of the regular risk assessment conducted by the EBA and complements its biannual risk assessment report.