The European Central Bank (ECB), in its formal financial stability review, predicts difficult times for commercial banks in the Euro area.
According to the regulator, it will last for the next 2021, Report says, citing banki.ru.
A document published on the regulator's website states that the recovery of banking sector profits to the last year's level is not expected until 2022. In turn, this situation will all this time harm the entire European economy by reducing the lending potential.
By the end of the current year 2020, the ECB predicts that the Return on Equity (ROE) maybe only 1.7%. In contrast, a year ago-in 2019-it was 6%.
Later, the banking sector, and the entire European economy, will gradually recover, the document says. The ECB forecasts 3.1% in 2021 and 5% in 2022.
It is noted that this forecast of the regulator is not final. It may be revised down if the Eurozone countries' authorities introduce new restrictions due to the coronavirus.