The profitability of the large Italian banks in the first nine months of 2016 recorded a significant decline. This is what we read in the Economic Bulletin published today by the Bank of Italy.
The report noted that for the largest institutions, the annualized return on capital and reserves (ROE) fell to 1,4% from 3,8% in the same period a year earlier.
Both the interest margin and other revenues were down (by 4,3% and 1,4% respectively), while operating costs increased by 6,1% “mainly due to the extraordinary charges associated with the incentive plans the redundancy of part of the staff and with contributions to the deposit guarantee and resolution funds”.
It should also be underlined that, according to the data reported by Via Nazionale, value adjustments to loans increased by 20,6% following the increase in the coverage rates of non-performing exposures by some intermediaries. Finally, in the third quarter of 2016 the Cet1 ratio of the large banks stood on average at 11,9%, an increase of around ten basis points compared to the June figure.
