Capital and earnings is the second factor in our assessment of banks’ SACP. It is about an entity’s ability to absorb losses under stress. Capital and earnings assessment is measured on a six-point scale corresponding to six different possible notching results. A score of 1 (leading to a 2-notch upward adjustment from the anchor) represents strong capitalization. A score of 3 (no notching adjustment applied) represents adequate capitalization, while a score of 6 (a 3-notch downward adjustment from the anchor) represents very constrained capitalization. Our capital and earnings assessment is forward-looking. Click the link below to read more.
20210923_commentary_how-we-approach-banks-capital-earnings_en.pdf
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