The impact on net interest margins depends on banks’ capacity to re-price deposits and loans and on the predominance of floating and fixed rate loans in banks’ balance sheets. The ECB is aware that some of the positive effects of our policy on banks’ profitability will wane with time. However, low or negative interest rates cannot be blamed for low profitability per se.
Amid these developments, private banks’ lending continues to decline by about 2-3 percent on a yearon-year basis. The amount outstanding of corporate bonds and CP issued is moving at around the previous year’s level. Meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe.