“The recent stress test conducted by the European Banking Authority and the ECB confirmed… the European banking sector… would withstand even a period of severe stress.”However, this improvement isn’t reflected in what the markets think about the banking sector, she added: “So far this year, European bank shares have lost more than 20 percent of their value. Nouy argued that two key factors are hurting banks’ long-term profitability, and hence their share prices: Interest rates and NPLs. Some parts of the European banking sector still have high levels of NPLs, which curb profitability. That was the point where Nouy’s speech went beyond just tallying up current conditions in the European banking sector, and hinted at new policies in development at her agency. “ECB Banking Supervision will shortly launch a consultation on guidance for banks on dealing with their non-performing loans,” Nouy said.

Source: Daily News Egypt September 08, 2016 18:00 UTC