The ratio of new bad debts to outstanding loans holds at about 1 per cent for firms and 0.8 per cent for consumer households, levels that can be considered normal. The impact of the international financial turbulence on the accounts of Italian banks has been relatively limited so far. However, income and profitability will continue to be affected if the tensions do not ease.
The cost of funding on international markets remains high. The slowdown in economic activity could have an impact on loan growth and quality, weighing on profitability on a risk-adjusted basis.