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Non-performing loans, low profits challenge European banks

first_img Facebook LinkedIn Twitter James Langton U.S. action on climate benefits banks, asset managers: Moody’s Share this article and your comments with peers on social media Keywords Banking industry,  Europe The ratio of non-performing loans came in at 5.1% for the quarter, the report adds. This was down by 30 basis points (bps) from the third quarter, which the report says suggests that “supervisory efforts are bearing fruit, albeit slowly.” Looking ahead, the report says that the EBA’s survey of 156 banks, which represents 80% of assets in the bank sector, shows that “more than half of the banks plan to increase their volumes of corporate and SME financing portfolios, as well as residential mortgage and consumer loans.” Additionally, the banks’ capital ratios improved a bit, primarily due to a decrease in risk-weighted assets, the report notes, with banks’ common equity tier 1 ratio increasing by 20 bps to 14.2%.center_img G7 tax pledge may be upstaged by CBDC work Troubled loan books and weak profits are the main challenges facing the European banking sector, according to a report published on Monday by the European Banking Authority (EBA). Bank sector profitability remains squeezed in the fourth quarter, the EBA report says, and return on equity (RoE) declined to just 3.3%, which was down 2.1 percentage points from the third quarter. Related news High debt levels threaten banks’ strong results: Fitchlast_img read more