However, in the first nine months of 2017 provisions still absorbed almost two thirds of the operating profits of Italian Significant Institutions. 17 A second cyclical determinant of weak profits is the low net interest margin, which in turn is driven by a combination of low interest rates, a flat yield curve and anemic credit growth.
Again, the economic recovery is reducing the impact of these factors. We expect net interest income to grow in the next two years, driven by credit growth and a steepening of the yield curve. 17  Over the last three years banks needed to increase the coverage ratios to sell impaired assets on the market.