Euro zone lending to go up but ECB policy weighs on profits
A European Central Bank survey found that banks are set to expand lending for the second quarter
The European Central Bank’s ultra-easy monetary policy of negative interest rates has improved access to finance in the hope of reviving growth and inflation, it comes at a price, reports Reuters.
A new ECB survey found that most banks see the overall impact on profit was negative, despite the increase in lending. The dent to profits due to negative interest rates has not been offset by capital gains or higher lending volumes.
Separate data released by the ECB on Tuesday confirmed euro zone banks’ return on equity fell in the fourth quarter of 2016 to 3.23% from 4.41% a year earlier.
But despite the depressed profits, the survey found that banks are gearing up to increase lending for the second quarter.