Although the decline was substantial, overall profitability levels continued to be well above those recorded in the second half of the 1990s. In the course of 2003 profitability picked up again. Banks’ solvency levels remained relatively unaffected by the adverse events. Thanks to these adequate financial buffers, banks were able to withstand the shocks in their operating environment.
The aggregated total regulatory capital ratio continued to hover around 12% throughout the period after 2000, which is well above the required minimum ratio of 8% for individual institutions. Although the overall picture was rather comforting, I have to qualify this somewhat by saying that some individual institutions indeed experienced serious difficulties.