In the face of a dramatically worsened economic outlook, which suddenly heightened the risk of insolvency for firms, the banking system quickly increased its loan loss provisions, although with some differences between banks. Profits in 2020 were inevitably affected, though capital ratios were not.
Dividend distribution was very prudent, mainly owing to the recommendations issued by the European Systemic Risk Board, the Single Supervisory Mechanism and the Bank of Italy, supported by granular supervisory action. Public loan guarantees contributed to limiting riskweighted assets.