Visco: Italian banks are healthy, and the rate hike helps

MILAN. «Despite the cyclical slowdown, the main indicators of the state of health of the Italian banking system remain positive overall. The Governor of the Bank of Italy, Ignazio Visco, says so in his speech at Assiom-Forex. “In the presence of a more rapid rise in lending rates, the increase in market yields favors banks with traditional operations, which in recent years had seen their profitability compressed by low interest margins”, underlines Visco.

“The quality of credit remains good: last September – notes Visco – the incidence of non-performing loans net of value adjustments was equal to 1.5 per cent”. As for the «significant banks, it is substantially in line, at 1.2 per cent, with the average of the countries that adhere to the Banking Union. The flow of new non-performing loans remains low, at around 1 per cent of loans. Liquidity margins – adds the Governor – were slightly reduced following the first repayments of the targeted longer-term refinancing operations (TLTRO) but remain well above the regulatory minimums”. , in one of the passages of his speech, recalls that “last summer we conducted an ad hoc survey on the refinancing plans of the banks, also in the light of the forthcoming TLTRO maturities. It emerged that the Italian banks intend to repay these loans by resorting in part to the excess reserves held with the Eurosystem and the sale of liquid assets; just over half would be replaced with alternative funding sources, attributable – says Visco – above all to recourse to the market and customer funding».

The governor also asks: “In Italy, budget policy can continue to mitigate the effects of energy price increases by redistributing resources, with targeted and temporary interventions, in favor of the most affected households and businesses”. According to Visco, “on the other hand, repeated shifts in the process of consolidating public finances should be avoided, which would increase the burden of adjustment on the part of future generations, already burdened by the weight of a very high public debt”.

Visco calls for “responsible decisions” from the social partners on labor costs to avoid a further element of inflation. And he explains how “price stability does not depend solely on the action of monetary policy, business strategies, labor cost agreements and budget policy also contribute to it”. In particular, Visco requests «that the dynamics of prices and wages remain consistent with the maintenance of monetary stability. In real terms, the growth of wages finds its limit in the evolution of productivity. In our country, in particular, where both productivity and wages in real terms have stagnated for too long, the investments and reforms envisaged by the National Recovery Plan will play a fundamental role in creating more favorable conditions for business activity and resilience”.