Digging into the comprehensive assessment data: Profitability

Summary

The large volume of impairments which exceeds pre-provision income in several countries makes half of the banking sectors unprofitable in 2013 (Slovenian, Cypriot, Portuguese, Italian, Greek, Irish and Austrian). Some of these impairments are extraordinary and reflect the need of balance sheet repair ahead of the AQR. After several years since the beginning of the crisis, the high level of impairments continues to be the first drain on profitability. Therefore among the best performers we see banking sectors with low earnings generation capacity but which display low levels of impairments as result of their good asset quality. The most profitable banking sectors in 2013 are those from Luxembourg, France, Germany and the Netherlands (thanks to low impairments) as well as the Spanish, which combines a high level of pre-provision profitability with still high, but manageable, impairments.

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