(Finance) – In the latest update of his Financial Stability Report there Bank of Italy pointed out that i risks “they remain high even in Italy”, but the impact of the tensions on the international banking markets “was limited, thanks to the limited exposures of Italian banks to intermediaries in crisis and, more generally, to the strengthening of balance sheets achieved in recent years”. According to the report, as for the other euro area countries, “the persistent geopolitical instability, the significant inflationary pressures and the slowdown in growth weigh on it”.
The overall picture on a global scale is one of “big uncertainty, the conditions on global financial markets they’ve gotten worse since last February. The recent episodes of banking crises in the United States and in Swiss have led to a sharp increase in volatility – continues the institute in via Nazionale – an increase in the risks of contagion and significant reallocations of portfolios from higher risk assets towards those considered safer”.
These tensions, however “have subsided after the interventions from the authority”. Meanwhile, in the first quarter of the year “the phase of weakness of the world economybut there are signs of improvement. Growth estimates for 2023 continue to foreshadow a marked slowdown, but less marked than last autumn’s forecasts”.
The Bank of Italy then underlined that the conditions of the Italian banking system “are good overall. The quality of assets shows no signs of worsening and profitability has improved, favored by the increase in the interest margin. Even in the presence of a reduction in funding and a reorganization of customer deposits, the liquidity profile remains balanced both on short-term maturities and on a medium-term horizon”.
The institution stressed that, in case of need “the availability of eligible assets For refinancing operations in the Eurosystem (the so-called collateral securities-ed) remains wide”. “The main sources of vulnerability for the banking system they continue to come from the weak macroeconomic prospects and from the uncertainty of the international geopolitical situation, aggravated by the persistence of the conflict in Ukraine”, reads the report.
According to the Bank of Italy, it appears “unlikely” that a situation will materialize in which Italian banks are forced to sell titles in portfolios before maturity, running into any losses from capital losses. In banks “the profitability would also remain positive in 2023, but the capacity of reimbursement of the loans by households and businesses could weaken, with potential repercussions on value adjustments – he added – which are still at low levels. Further upward pressure on the cost of electricity may also emerge collection, also due to the need to continue to replace i acquired funds through the extraordinary refinancing operations of the Eurosystem (Tltro3) and the need to issue instruments capable of meeting the minimum requirement for own funds and liabilities subject to bail-in (Mrel)”.