Research Briefing | Feb 1, 2022

Eurozone banks dodge Covid bullet, but vulnerabilities remain

Ipad Frame - Eurozone | Banks dodge Covid bullet, but vulnerabilities remain

The banking sector has proved resilient during the pandemic, and eurozone banks will continue to play a significant role supporting the near-term recovery. That said, a sustained virtuous cycle between banks and the economy looks unlikely in our view.

What you will learn:

  • Eventually, eurozone banks will have to deal with long-lasting weak profitability.
  • Sector fragmentation means cost efficiencies remain limited, while revenue prospects are constrained by low interest rates and a relatively flat yield curve.
  • Corporate fragility remains high in the sectors more heavily impacted by the pandemic.
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