Nevertheless, profitability remains weak in parts of the euro area banking sector and important vulnerabilities and structural challenges remain. These challenges include incomplete adjustment of bank business models, cost inefficiencies, overcapacity and still-large stocks of NPLs for parts of the euro area banking sector. First and foremost, it is up to the banks themselves to undertake the needed adjustment.
While the Central Bank has set out its sustainability guidelines, nobody, least of all borrowers, would be served by the Central Bank attempting to place a narrow straitjacket preventing innovation around possible solutions within those guidelines.