Strict cost control, lower litigation
The main reasons for the improvements were strict cost control, lower litigation
expenses and, once again, lower loan loss provisions.
Banks cut administrative
expenses by a solid 5.5%, and provisions fell by 25%. The year before, large
writedowns on bad loans had still been a burden, especially in Italy. A few banks
were even able to release reserves on a net basis, i.e. Loan loss provisions
added to rather than reduced net income.
Combining slightly higher revenues
and a meaningful drop in expenses, the cost-income ratio decreased by 4 pp to
63%.
EU Forecast
euf:ba18.d:41/nws-01