- More than 7,000 jobs to go as Deutsche Bank finalises its equities business review
- Overdraft fees still worse than a payday loan, warns Which?
- Bank of America issues fourth and largest corporate green bond
- Banks more concerned with technology-driven trends than regulation, says report
- Price of flats climbs £1,250 a month, says Halifax
- Mastercard launches Accelerate to continue helping Fintechs
- Customer’s right to be forgotten under GDPR an opportunity for banks, says Optimove expired
- Ulster Bank supports Balmoral Show in its 150th year expired
- Cambridge & Counties secures ENABLE Guarantee from British Business Bank expired
- Barclays appoints new research role expired
- Latest jobs data show finance sector remains strong expired
- KeyBank "Outstanding" rating from OCC on community reinvestment act exam expired
19th January 2018
Italian banks will continue to heal in 2018, says S&P
Italian banks are looking healthier now than they have for the past few years, according to S&P. Private sector creditworthiness has improved and banks' efforts to repair their balance sheets have paid off, to the extent that a return to some moderate profitability in 2018 is now expected.
Institutions have been strengthening their capital, bolstering loan-loss reserves, reducing their stocks of non-performing exposures (NPEs), and cutting costs. The government intervention to support troubled institutions has helped to preserve the financial stability and restore market confidence.
These have all contributed to the recovery, which S&P expects to be further supported by economic expansion in Italy. However, the prognosis is not completely clear. S&P estimates that at year-end 2017, banks had a still-high EUR275bn of NPEs on their books, representing 17 per cent of customer loans – around half of which are covered by provisions.
The ineffective judicial system makes recovery more difficult and slower than for most banking sectors in Europe. Additionally, institutions have modest profitability prospects, largely due to a still-high cost base, a lack of sufficient revenue diversification, and high competition.
Therefore, banks that act late, or not effectively enough to undertake effective measures to reduce those weaknesses, will be more vulnerable once the European Central Bank's measures begin to be phased out.