The losses of the banks of particularly South European countries have increased significantly, the Bank of Finland tells in its newest financial markets report.
The emphasized the return on equity of the banks of the euro area average was 3,3 per cent at the end of June when it last year was 4,5 per cent.
The reason for the weak profitability is a low weak economic situation, growing write-down losses and a low interest level.
Even though the loan margins have risen, the growth has been modest. The problem of the banks of South European countries is furthermore expensive own market financing which has remained distinctly more expensive than during the time which precedes the financial crisis. This expands interest expenditures and for its part weakens interest cats, the Bank of Finland states.
Especially in the South European countries the significant write-down losses of credits have had to be made.
Still the constant growth of problem credits also is worrying. The growth of problem credits is still quicker than the amount of recorded write-downs.