Scope Ratings has published an update to its Financial Institutions Rating Methodology. No outstanding ratings are impacted.

July collections fell 23% month-on-month, slightly better than the previous three years when average collections were 28% lower. But while July was relatively on trend, actual collections were 35% below the previous three-year average.

Housing, the main collateral for covered bonds, contributes more than a third of Europe’s GHG emissions. Yet while climate change can significantly amplify credit risk in covered bonds, mitigation can add more credit risk than actual climate impacts.

Europe’s data centres continue to demonstrate strong credit fundamentals and the growth outlook is positive, underpinned by demand and an under-supply of physical space and power capacity.

French banks are well positioned to navigate short-term market volatility, but a prolonged political crisis could weigh on the sector via lower growth in lending and higher funding costs, partially reversing recent improvements in profitability.

UK banks’ credit fundamentals are strong. While we do expect some asset-quality weakening, profitability will remain high in 2025, capital is robust, liquidity is stable and deposits are growing. Meanwhile, sector consolidation will continue.

We continue to expect a mild deterioration in asset quality as pressure in some corporate sectors intensifies amid heightened geopolitical risk and a potential slowdown in global trade.

The UK Supreme Court judgment partially reversing the Court of Appeal ruling on car finance provides widespread relief to the banks affected as it will materially reduce compensation payouts. The FCA redress scheme will further moderate credit pressures.

Stress-test results demonstrate the improvements Italian banks have made in recent years. Capital positions are comfortable, asset quality is robust and profitability is resilient. Record first-half results point to another strong year.

The EU bank stress-test results align with our view that banks’ credit profiles are resilient and would help soften the impact of rising economic and other challenges on credit risk. But risk is skewed to the downside.