Also, in Europe, the share of deposit funding to overall financial liabilities is low, and the costs of market financing such as issuing corporate bonds have been declining. Moreover, financial institutions in Europe have secured various sources of revenue that are unsusceptible to changes in interest rates by, for example, diversifying fees on services (Chart 14).
For higher profitability going forward, it is hoped that regional financial institutions will (1) set lending rates that reflect risks appropriately, (2) depart from excessive dependence on deposit-taking and lending activities by, for example, increasing fee-based income, and (3) drastically improve their business efficiency.