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Prometeia’s analysis on Italian banks’ balance sheets: encouraging figures, but problems persist

Prometeia, the global leader in Risk Management consulting and software solutions, with over 40 years of experience in economic research, quantitative analysis and model development, presented its regular analysis on Italian banks’ balance sheets at the latest edition of Prometeia’s Banking Day in Milan last 30th of September

The Banking Day is the one-day Prometeia event aimed at presenting the outlook for Italian banks and discussing the industry’s main challenges with a qualified audience of bankers and professionals.

The report produced analyses half-year balance sheets of the 13 Italian biggest banking groups (the 12 banks supervised by the ECB plus Credito Valtellinese minus Mediobanca, Barclays Bank and Iccrea Holding)

The main highlights feature:

  • Return on Equity (ROE) in H1 2016 is still positive (0.8%), even if declining compared to H1 2015. Consolidated net income is around 1.3 billion euros, down from 2.9 billion in 2015, due to non-recurring losses, a decrease in revenues, an increase in operating costs and in loan loss provisions, given the still high level of non-performing loans.
  • Volumes of gross non performing loans decreased for big groups, while increased for medium groups. The coverage ratio continues to improve, though, particularly for all medium-sized operators (which however remains lower ratio than the Top 5)
  • Common Equity Tier1 (CET1) ratio is improving (+21 basis points to 11.7%), due to an increase in regulatory capital (+1.4%, thanks to retained profits and equity issued by Banco Popolare, Banca Popolare di Vicenza and Veneto Banca) and a slight decline in RWAs (-0.3%). Bper achieved a substantial improvement in its ratio (+325bp), thanks to first time adoption of internal ratings-based approach.
  • At European level, CET1 ratios performed differently: special mention for German banks, whose ratios decreased but still were on the top of the sample.

With over 40 years of experience in economic research, quantitative analysis and model development, Prometeia is a global provider of consulting services and software solutions focused on Risk & Performance Management. With over 600 industry experts, we serve over 200 financial institutions in 20 different countries, through a consolidated network of foreign branches and subsidiaries located in Europe, Africa and Middle East.