It has been designed to be used as an important input into the Supervisory Review and Evaluation Process (SREP), with the primary aim of setting total capital requirements. Similar to the 2016 EU-wide stress test, the 2018 EUвЂђwide stress test has no pass/fail threshold for the projected Common Equity Tier 1 (CET1) capital ratio in the adverse scenario. The stress test results can nevertheless serve as a valuable analytical tool for assessing the potential resilience of bank balance sheets in response to the specific shocks considered. In addition, the results do not take account of possible reactions of banks to shocks, as the stress test is based on an assumption of a static balance sheet. The adverse scenario, designed by the ECB and the European Systemic Risk Board, is a hypothetical one reflecting the systemic risks that were assessed as representing the most material threats to the stability of the EU banking sector at the start of the exercise in January 2018.ДЄs the adverse scenario of the stress test is hypothetical, the estimated impacts of this scenario should not be considered as forecasts of banksвЂ™ profitability.

The assumptions regarding the macroeconomic variables in the baseline scenario are in line with the December 2017 forecast published by the ECB. The stress test contains a baseline scenario and an adverse scenario, both of which have three-year horizons.

The objective of this EUвЂђwide stress test is to provide supervisors, banks and market participants with a common analytical framework to compare and assess the resilience of large EU banks and the EU banking system to a number of hypothetical adverse economic shocks. ING Belgium and BNP Paribas Fortis, which are subsidiaries of foreign banking groups, are included in the stress test through their parent institutions. The EU-wide stress test exercise for the group of the largest EU banks includes Belfius and KBC Group. The EBA published today the detailed results of the EBA stress test exercise conducted for 48 large EU banks, of which 33 institutions in euro area countries directly supervised by the European Central Bank (ECB).

Kbc 2018