Supervisors will use the results to carry out their supervisory review and evaluation process. While still low, the profitability of Italy’s leading banks improved in the first nine months of last year. Return on equity was 4.4 per cent, compared with 1.4 per cent in the same period of 2016.
According to banks’ expectations, profitability over the coming years should be sustained by a reduction in loan loss provisions, an increase in asset management fees, and a decrease in operating expenses. But an in-depth review of banks’ business models is inevitable in Italy, as it is throughout the EU. Some important factors that could dampen profitability must not be underestimated.