The president of the Supervisory Board of the European Central Bank (ECB), Enrique Enria, has assured that these are close to 10%, although for now it does not represent a threat to banks, since they are not considered doubtful loans (‘non -productive loans’, NPL).
In an interview with the Greek newspaper ‘Kathimerini’, Enria has acknowledged that, although the “moderate recession” and the rise in rates may slightly increase the number of NPLs, in general, the increase in revenue derived from this same rise “will compensate amply” this circumstance on the banks’ margins. Enria has also stressed that the European banking sector is in good shape after reducing the ratio of NPLs in its assets since the last crisis and due to the increase in profitability after the end of the ‘cheap money’ era.
With all this, Enria has urged European financial institutions to limit their exposure to electro-intensive sectors or those that are especially sensitive to interest rates. In this sense, Enria has also warned that the high public debt during will make a new State bailout for families, SMEs and large companies unlikely, such as the one that the pandemic unfolded and that cushioned the banks from the impact of the coronavirus crisis. .
On the positive side, the supervisor has highlighted that the rise in interest rates has been beneficial for European banks, since it has warned their interest margins and because the quality of their assets has improved throughout 2022. In addition, it has stated that the baseline scenario predicts that banks will increase their profits and show resilience in the face of possible turmoil in the short term.