Ethical banks are more profitable than conventional ones

Over the past ten years, 10pm European ethical banks they have surpassed conventional banks in terms of profitability, also showing financial solidity and distinctive values, the latter given by the strong orientation in support of the real economy and the hot topics of the social agenda, starting fromExg (environment, social inclusion and good corporate governance rules). It is the main evidence of the sixth report on ethical finance in Europethe result of the collaboration between Fondazione Finanza Etica, Fundación Finanzas Éticas and European Federation of Ethical and Alternative Banks (Febea).

Profitability indicators compared

The comparison was made with the 60 most important traditional banks of the Old Continent, those subject to direct supervision by the ECB. The latter present on average a Roe (return on equity) of 2.21% against 5.23% of ethical ones. While, if you look at the ROA (profitability of assets)the latter stand on average at 0.46% against 0.25% for conventional banks.

If instead you look at the active, ethical banks are more focused on traditional banking activities, especially on credit, while traditional ones focus more on investments and placement of funds and securities. The former have customer deposits as their main source of liquidity, while the traditional ones are more diversified with a consequent lower deposit/net worth ratio.

As for the financial solidityethical banks have maintained a constant over time strong capitalization – with a ratio between net assets and total liabilities equal to 8.2% on average – while the others have improved their capital position, but starting from a weaker position, growing from 4.3% in 2012 to 6.20 % in 2021.

The challenge of greenwashing

“While the giants of the conventional banking system make sustainability commitments which are often later denied and do not affect a business model overall oriented towards maximum profit at all costs, European ethical banks instead stand out for the coherence between actions carried out and principles supported” , is the analysis of Teresa Masciopintopresident of Fondazione Finanza Etica – The research underlines the importance of removing the shadows of from the financial sector greenwashing and socialwashing”.

While Anna Fasano, president of Banca Etica, sees in the ethical realities of credit an engine “that is revolutionizing the banking and financial sector in Europe. Dialogue with the institutions of Brussels and Frankfurt and with civil society actors together with collaboration with international ethical finance networks – he underlines – are the tools to amplify our ability to influence these processes. We want to share values ​​and good practices to reduce the arbitrariness of what Europe defines as sustainable investment, to discourage greenwashing and enrich environmental sustainability requirements with economic and social dimensions”.