(Finance) – S&P Global revised the risk trend for the Italian banking sector from “stable” to “positive”: positive interest rates and a normalized credit cycle contribute substantially to strengthening the profitability prospects of Italian banks.
The improvement in the risk trend emerges from the monitor on financial institutions in the EMEA areafrom S&P’s first quarter, according to which the performance of banks in Europe, the Middle East and Africa will remain broadly stable in 2025 thanks to “encouraging fundamentals”.
Area banks will maintain “adequate profitabilitya solid one liquidity and a strong one capitalization over the course of 2025,” says Natalia Yalovskaya, credit analyst at S&P Global Ratings, while profitability “will decline only moderately” from the levels we have seen in most banking sectors in EMEA, over the past two years, supported by higher demand of loans against a stable cost of risk.
In any case, as falling interest rates “put more pressure” on profits, banks “will be forced to manage the cost of funding, continue to use rate hedges and increase their control over operating costs”, he added Yalovskaya.