There is no doubt that the strong growth in bank lending in the period before the financial crisis took place at the expense of credit quality. But in recent years the trend in banks’ domestic lending relative to sector employment has flattened.
This indicates a need for further capacity adjustment, which can be achieved either by scaling down activities or by finding a merging partner with a view to boosting profitability. *** Payroll costs make up the most significant item on a bank’s operating budget.