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The overall number of financial institutions has diminished, as have the totals of assets, deposits and loans. At the same time, the number of non-performing loans keeps increasing, while the loans-to-deposits ratio keeps diminishing.
In parallel, banks are struggling to tame their cost-to-income ratio: increasing costs for the sector are met by reduced income, a balance that is more and more difficult to keep. Indeed, the EU domestic banks’ return on equity was a negative - 1.6% in 2012; banks have however increased their Tier 1 capital to an average 12% as required.
The first two chapters of the report cover the trends in banking and the economy registered for 2012. This time authors made an effort to expand the EU-level overview of banking sector figures with the data on securities (chapter 1, section 7).
Special features focus on euro area deposits (chapter 3) and on trade finance (chapter 4).