Fitch said that most western European banks front-loaded their accounting of anticipated loan losses, known as loan impairment charges in 2020 due to substantial uncertainty about the course of the pandemic and its impact on the economy. The advent of massive vaccination programmes and improved economic forecasts have already led some banks to partially write back expected losses and bad loan assumption in the first part of this year, Fitch said. More European banks are likely to follow suit later in the year if the recovery continues favourably, analysts said. However, Fitch said it expects the two main Irish banks, AIB and Bank of Ireland, to make lower levels of impairments this year than in 2020, but still higher than in a normal year. In the Irish case it means that if bad loans increase once Covid supports are removed, as expected, next year, more of those losses will be borne by the banks.

Source: Irish Independent June 29, 2021 01:30 UTC