ECB Expects Difficult Time For Eurozone Banks
The European Central Bank (ECB), in its traditional financial stability review, is forecasting challenging times for commercial banks in the euro zone. The authority believes that this will continue at least through the next 2021.
The document published on the ECB’s website says that the recovery of banking sector profits to last year’s level in 2019 is not expected before 2022.
This situation, in turn, will have a negative impact on the entire European economy through the reduction of lending potential.
According to the results of the current year 2020, the ECB forecasts that ROE can be only 1.7%. A year ago, in 2019, it was 6%.
Later on, the banking sector, followed by the entire European economy, will begin to recover gradually. The ECB forecasts 3.1% in 2021 and 5% growth in 2022.
It is noted that this is not the final forecast. It may be revised downwards if the authorities in the eurozone impose new restrictions due to the COVID-19 coronavirus.