*  *  *  As this crisis hits its first anniversary, it has evolved into an even more complex combination of rising inflation, declining growth, tightening credit conditions, and widespread liquidity tensions pervading the global financial industry. Banks have raised a significant amount of capital to partly offset writedowns and credit losses.
But they are now moving into a phase where credit losses in the banking book will begin to rise. And banks are entering this phase with weakened balance sheets. Alongside a rise in credit related losses, the outlook for bank profitability is poor.