The increase in market rates is once again making headlines. But the banks don't suffer that much. On the contrary, the Stoxx index of the European sector is starting to close on the highs of the last thirteen months, expanding the performance since the beginning of the year to +22,5% against the +10,0% recorded by the global Stoxx index. Only the Stoxx Travel & Leisure Index managed to outperform the period with a +24%. Merit of the optimism on the restart generated by massive vaccination plan underway across Europe resulted in an increase in yields, a boon for the financial sector accustomed for years to market rates cut to the bone but also to pay a fee to park liquidity at the ECB, a phenomenon that is only now biting Italian institutions (just think of the Fineco campaign to encourage the transformation of deposits into government bonds without commissions) but which has been afflicting the countries of Northern Europe for years.
German start-up Deposit Solutions has tried a calculate how bad negative deposit rates have done introduced by the ECB seven years ago. It is estimated that credit institutions paid a total of 34 billion euros, 8,4 billion in 2020 alone. 60% of the 2020 total was borne by German and French banks, which last year paid charges respectively 2,7, 2,5 and 362 billion, while the weight on the Italians was limited to XNUMX million, partly mitigated also by the tiering mechanism adopted by the Eurotower.
On the other hand, the research continued, cited by Il Sole 24 Ore, the banks benefited from hyper-advantageous conditions thanks to ECB T-Ltro III loans: Deposit Solutions itself believes that the revenues of the banks deriving from the concessions granted by the ECB itself have been in the order of 8 billion in seven years, but distributed very unevenly in the euro area.
In fact, institutions in southern Europe in particular have access to this type of financing: Greece, Italy, Spain and Portugal (in addition to France), which now derive the greatest benefits. Deposit Solutions calculates that Italian banks almost doubled their use of this precious resource in 2020, bringing it to 374 billion, a figure which corresponds to 10% of their assets (only Greece surpasses us with 12%).
for Italian and Spanish banks the interest income generated by the T-ltro financing is therefore able to overcompensate the effects of the negative deposit rates paid to the ECB, leaving them a surplus of 1,6 billion and 1 billion respectively. On the contrary, the balance remains negative for the Dutch (342 million), for the French (412 million) and above all for the German (over one billion).
The increase in rates can serve to limit these imbalances to the benefit of the accounts. The quarterly reports overall show more positive indications after lean years thanks to solid recovery in investment bank business and declining provisions. Starting from BNP Paribas which recorded profits of 1,76 billion euros in the January-March period, up 37,9% year on year and 11% on the previous quarter, beating consensus expectations of 1,24 billion.
Positive messages also come from Spanish Bbva which recorded a quarterly net profit of 1,2 billion, which compares with the loss of 1,8 billion recorded in the first quarter of 2020. The figure is higher than forecasts. Here too, a decisive contribution came from the sharp reduction in provisions for bad debts.
Finally, the British group Barclays announced an almost tripled net income in the first quarter, thanks to the sharp reduction in provisions. Net income rose to £1,7 billion.
In this context, however, the tension on the market interest rate front remains high, but under control, after the strong signs of recovery from the US economy. After all, a season of price increases is also looming in Europe: in April the increase in inflation in the euro area year on year was 1,6%, accelerating from +1,3% in March. But it is a given in line with forecasts, as confirmed by the trend of the 0,20-year Bund at -111%, a slight decline on the previous day's prices. However, the spread with BTPs remains at a guarded level around 0,859 with the Italian XNUMX-year yield down to XNUMX%. The spotlights are now focused on tonight's rating update by the Canadian agency DBRS which shouldn't give any nasty surprises.
