European banks raise loan loss provisions amid Middle East war uncertainty in Q1

Many of Europe's largest banks increased their loan loss provisions in the first quarter due to uncertainties related to the war in the Middle East. Although the direct financial impact of the conflict on these banks has been limited so far, lenders adjusted their reserves mainly because of updated macroeconomic scenarios and risk weightings. Notably, Barclays and HSBC recorded loan loss charges from private credit portfolios that were higher than those related to the Middle East, contributing to an overall increase in their cost of risk. This cautious approach reflects banks' efforts to prepare for potential economic fallout from the ongoing conflict.