The BdE encourages to maintain resilience to avoid the increase in non-performing loans
The Governor of the Bank of Spain, Pablo Hernandez de Kosassured this Thursday that bank profitability is higher than before the pandemic and higher than the cost of capital, although it has warned about the possibility that the current crisis causes “damage to banking” in the form of an increase in delinquency. Hernández de Cos participated this Thursday in the International Banking Conference organized by Santander, during which he held a talk with the entity’s CEO, José Antonio Álvarez, moderated by the president of the Spanish Banking Association (AEB). ), Alejandra Kindelan.
Cos has pointed out that the delinquency rate has fallen since the previous crisis, which is why it has urged entities to be part of the solution, although it has warned of possible “damage” in the form of lower credit volumes and an increase in arrears; hence there is encouraged to “maintain resilience and increase it in the long term”. From the sector, José Antonio Álvarez has indicated that banks, as financial intermediaries, must convey to savers “that what is done is what has to be done”, at a time when it is to be expected that some borrowers will have difficulties repay their loans, a “traditional” problem in the sector.
In this context, when the economy slows down, it is necessary to support customers and adapt to their payment capacity, logical at a time of high inflation, and banks must adapt to the payment capacity of families and companies, he said. Regarding inflation, Hernández de Cos has reiterated that the rise in prices and its impact on the shopping basket “will make more rate increases necessary” by the European Central Bank (ECB), although the decision will depend on the economic forecasts for the coming months.
Inflation, explained the governor, has grown and affects the entire shopping basket, which explains the reaction of the ECB, which at its last meeting raised interest rates in the euro area at 2%. For this, the organization is based on inflation forecasts, which, in turn, depend on economic conditions and the possibility of a recession, so when the new macro projections are known, it will be seen what decisions the ECB must adopt , has indicated. The governor has been in favor of fiscal and monetary policy go hand in handsince a generalized fiscal impulse “is not necessary” and can be counterproductive to reduce inflation.
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