The problems besetting the ‘business of banking’ today What problems do Italian banks face today, now that the fall-out from the crisis, specifically the ratio of non-performing loans, is slowly diminishing? Essentially, our banks generate too little profit, even excluding the cost of bad loans. To understand why, it helps to look at what has happened internationally.
Over the last five years the return on capital and reserves, namely the return on equity (or ROE), of our banks has been virtually nil, while in the euro area ROE has been just under 2 per cent and in the United Kingdom it has hit 3; in the United States it has reached as much as 9 per cent.