The big banks Europeans will record losses for an aggregate amount of about € 53 billion in 2020, compared to the profits of 67,000 million accounted for in 2019 by 86 entities that participated in the vulnerability tests made by the central bank, according to the estimates of the central scenario managed by the institution in the exam.
Under the most probable hypothesis contemplated by the ECB, with a drop in gross domestic product (GDP) real in the euro area the 8,7% in 2020, with growth of 5.2% and 3.3% in 2021 and 2022, respectively, the level of European banking profits would not return to the pre-pandemic level until after 2022.
In fact, the institution contemplates a aggregate net profit for the examined entities of € 39 billion in 2021, under the central scenario of its forecasts, which would rise to 43,000 million euros a year later, still 36% below the earnings recorded in 2019.
According to the calculations of the ECB, the operating income of the European banking examined would be around this year 356,000 million euros, 19.8% less than in 2019, when they totaled 444,000 million. Next year, the ECB estimates that the aggregate turnover will rise to 393,000 million euros and a year later it will be around 392,000 million.
Under the central scenario of the ECB vulnerability tests, the average index of top quality core capital (CET1) of banks would deteriorate by only 1.9 percentage points, falling to 12.6% in 2022 from 14.5%, while in the most severe scenario, the average CET1 would fall to 8.8% in 2022 from 14.5%, which would make it difficult for some banks to continue complying with the minimum capital requirements, as the central bank warned on Tuesday.
The president of the Supervisory Board of the ECB, the Italian Andrea Enría, explained on Tuesday, in statements to the CNBC chain, collected by Europa Press, that the deterioration in the credit portfolios of eurozone banks in the central scenario managed by the institution in the tests could be around 180,000 million euros, “a quite high figure”, while in the adverse scenario, credit losses would reach about 385,000 million euros, “which represents a huge number of losses”.