the Losses of European banks for loans in case of aggravation of the situation with the pandemic coronavirus can reach 800 billion euros, and the income for three years will decrease by 30 billion euros. This is stated in the report of the consulting company Oliver Wyman, reports the Financial Times.
She made two scenario. In basic, the volume of non-performing loans will increase to 400 billion euros, which is 2.5 times more than in the previous three years. At worst, the share of non-performing loans will rise to 10 percent, and the volume of non-performing loans will double compared to the baseline.
this year, taking into account credit losses of the European banks ‘ revenues could fall by 180 billion euros to 385 billion. In 2022, the figure will not return to the level of 2019.
According to experts, net interest income in 2021 would be 8 percent lower than in 2019, and the average return on equity in the current year reaches zero, and only in 2022 will rise to 5.3 percent.
the Central Banks of Europe and the UK for more than ten years trying to recover from the 2008 crisis, when profitability in the face of competition has decreased.
However, compared to American banks, they are still two times less profitable. In the near future on the background of the increasing number of non-performing loans and falling profitability indicators underlying financial stability of European banks will decrease from 15 per cent to 3.8.
Oliver Wyman offers banks significantly to cut costs and change policies against problem loans. However, the company acknowledges, without state support, this is unlikely to achieve.
Previously, Janus Henderson predicted that the pandemic coronavirus global companies in 2020 will go into debt total amount to 9.3 trillion dollars.
