Not just BTPs, not just spreads. Even for the Italian stock market "the indicators point to a sharp increase in volatility close to the first week of December, in correspondence with the referendum on the constitutional reform". The warning comes from the Bank of Italy, which today published its new report on financial stability.
BANKS
In general, "the prospects of still modest growth in Europe and the uncertainty about political developments in the main advanced countries - writes Bank of Italy - could fuel strong variations in the prices of financial assets in the coming months". But it is above all the banks that weigh on Piazza Affari, which, according to Via Nazionale, "remain exposed to shocks of internal or international origin", potentially harmful to both the capital market and economic growth.
The main problem of the sector (not only in Italy) concerns profitability. In the first half of 2016, the Roe of our country's institutions halved compared to the same period last year, falling to 2,5%, while the operating result fell by around a quarter (a fifth if we exclude the costs of an extraordinary nature).
Still, there are some encouraging signs. Bankitalia underlines that our institutions continue to improve credit quality, reducing "flows and stocks of non-performing loans". In particular, compared to the end of 2015, flows decreased from 3,3 to 2,6% of total loans, while net amounts fell from 10,9 to 10,4%.
Even “the capital strengthening continues – continues the report -. In the first 6 months of 2016, the CET1 ratio grew by 10 basis points, to 12,4%. For significant banks it is equal to 11,7%, while for less significant ones it is 15,5%”.
As for the prudential leverage ratio, in June 2016 it was equal to "5,1% for the top five banking groups - writes the Bank of Italy -, against 4,7% for a large sample of European banks".
Another positive factor, according to Palazzo Koch, is "the improvement of the real estate market", which "mitigates the risks for the banks".
BUSINESSES
The report also shows that the GDP growth recorded this year, albeit weak, has allowed Italian businesses and households to reduce their financial vulnerability. The former, in particular, benefited from a recovery in profitability, with "the gross operating margin (GOM) growing by 5% in the twelve months ending in June 2016". Furthermore, also due to the effect of the drop in interest rates, "the incidence of financial charges decreased to 15,5% of the GOP, the lowest level since 2006".
Meanwhile, given the heterogeneous trend in credit, bond issues by small and medium-sized enterprises continue to increase, also thanks to the inclusion of corporate bonds in the ECB's quantitative easing. In the first nine months of the year, gross issues amounted to 22 billion: the total amount decreased by 3 billion compared to the same period of 2015, but both the number of issuers and the amount of placements increased among SMEs.
FAMILIES
On the household side, debt is increasing, but remains contained "at 61% of disposable income – continues the report -, against 95% in the euro area". In detail, home loans, "equal to 29 billion in the first 9 months of the year, reached their highest value since 2011", while "the reduction in interest rates has favored forms of renegotiation of the conditions obtained in the past: in 2016 the renegotiations, subrogations and replacements involved 6% of the mortgages outstanding at the end of last year”.
And thus the ability to repay debts is strengthened, to the point that "the deterioration rate of loans to households has returned for the first time to its pre-financial crisis levels (1,7%)".
In the field of investments, since the beginning of the year, Italian families have increased their investments in mutual funds and foreign securities, mainly selling government bonds and bank bonds. However, "there were no significant disinvestments from Italian public securities by non-residents", the report states.
INSURANCE
A separate chapter concerns the insurance industry and that of asset management. According to Bank of Italy, "the assessments of the market of insurance companies worsen, but profitability is good and the balance sheet remains solid".
Via Nazionale, quoting the latest Global Financial Stability Report of the IMF, recalls that "the persistence of interest rates at low levels for a protracted period represents a significant risk for insurance companies", but also clarifies that "the impact on the balance sheets of Italian companies it is more limited, thanks to the good alignment of yields and the financial duration of balance sheet assets and liabilities”.
FUNDS
As for asset management, the central institution underlines that "the net inflow of mutual funds set up by Italian groups remained positive, albeit slightly decreasing" and "the risks that high repayment requests could generate rapid disinvestments of portfolios are reduced". Lastly, for real estate funds, “profitability remains low, but the financial tensions of the system are easing”.
