Europe's safest banks, the ECB promotes the Italian ones: "The capital is solid"
No shocks from the Russian invasion of Ukraine, and rate hikes boost profitability
European banks, and Italian ones, are overall solid from a capital point of view and the feared shock resulting from the invasion of Ukraine has not materialized . On the contrary. Rate hikes are boosting profitability and a season of business combinations could reopen , including cross-border ones.
The risks of cyber attacks and computer fraud remain of some concern, increased after the conflict, with institutions committed to improving and strengthening defences.
The supervision of the ECB , at the end of the Srep exercise, says it is cautiously satisfied with the state of the sector where many groups, from Santander to BNP to Intesa Sanpaolo to name just a few, have presented record results . And yet it invites prudence because the other side of the coin of rates is that some problems are beginning to manifest themselves precisely on the ability to repay mortgages and consumer credit.
It should be remembered that the ECB, in some cases, has induced some banks to reduce the distribution of the dividend or has staggered share buybacks. Minimal measures, however, compared to the blocking of coupons ordered on the occasion of the pandemic and which in February, when the Russian army crossed the borders of Kiev, it was feared could be repeated. With the substantial go-ahead from Frankfurt, 51% of aggregate profits will thus return to shareholders this year.
Scrolling through the final report of the SREP, there are two areas where the inspectors and experts of the ECB have found deficiencies. Cyber defenses faced with increased threats after the Russian invasion where "fragmented and non-harmonised IT systems have been found with consequences for data aggregation and reporting". European institutes show flaws in governance. The analyzes revealed risks regarding the effectiveness and composition of the management bodies (also in relation to the presence of independent members, ed), their overall adequacy and the control role. The main concerns relate to risk management where "some banks are unclear about their risk appetite and have inadequate procedures in assessing and managing climate and environmental risks".
(Unioneonline/vl)
