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although the weak recovery that has been ongoing now for several quarters, is helping to restore the balance of the bank’s balance sheet. But despite the good performance of the institutions remain exposed to shocks of domestic origin and international, not only for the risks linked to the economy and to markets but also to those associated with the regulatory developments international.
The second financial stability Report released yesterday by the Bank of Italy confirms the progressive improvement of the quality of the credit and warns on the risk of high volatility of the Italian stock market in view of the constitutional referendum on 4 December. In the Report, you see a peak in implied volatility, which in December, jumped more than 4%. While from the beginning of the year there has been a differential high between the implied volatility of the Italian market and the Eurozone. The scissor is open at the beginning of this year, when I started the massive sales on the securities of Italian banks.
the analysis on The banks necessarily by the trend of loans at risk and it is positive in the third quarter the flow of new loans that have deteriorated as he has stopped to 2.6% of the total from 3.3 to the end of 2015, while stocks net are now 10.4% as against 10.9% at the end of 2015. Not only. According to the projections of the bank of Italy, the entry rate of new bad loans, consistent with the macroeconomic scenarios the most recent, this should reduce gradually over the coming months and to the end of 2017 is expected to fall to 1.2% for loans to households, a little above the pre-crisis levels, and 3.1% for business loans. Improve the profiles of the soundness of our banks, given that in the first six months of the year, the assets of the best quality of Italian schools (Cet1 ratio) is increased by ten basis points to 12.4%, with banks the most significant 11.7% (3 points more than in 2011) and those that are less significant to the 15,5% (+4%).
Always at the end of June the report of prudential financial leverage – which indicates the adequacy of capital in respect of a measure of assets weighted for risk according to the rules should not go below a minimum of 3% – was higher than the european average of around 5.1% for the top five national banking groups, against the 4.7% recorded on a sample of 39 major european banks. Only the profitability does not improve, with an Roe mid-year halved to 2.5% (compared to June 2015), while the operating result was reduced by a quarter. On the weak profitability continues to weigh the structural aspects that are common to all european banks and aspects economic (low interest rates and deflation) that impact more on Italian banks.
within this framework, one reads in the Report – the banks remain exposed to shocks is not only related to the markets. They are a source of uncertainty “important” also, the regulatory initiatives of the international in the course of completion, such as the reform on capital requirements (Basel 3), the introduction of those required to absorb the losses in case of resolution (the minimum requirement for own funds and eligible liabilities, MREL), and the entry into force in 2018 of the new accounting standard on the valuation of financial instruments (IFRS 9). According to the bank of Italy “in the implementation of these measures – as well as interventions and supervision designed to reduce the impact of the assets impaired – you will have to take account of the expected benefits of the long-term costs of the short term”.
Caution, therefore. Also because “the fears aroused in investors from poor profitability and the level is still high non-performing loans are reflected on the prices of shares went down from the beginning of the year,” noted the bank of Italy, “and the low level of the courses can make it more difficult for the capital increases planned and those that may be needed to perform aggregation operations”. All in a context, as you said, that short-term provides an increase in the volatility of the entire stock market. A volatility that will weigh on the “complex” plan of recapitalization and the cancellation of the sufferings launched from the Mount of the Feed. The bank of siena referred to in the Report, to remember the rejection to the stress test of July. Mps was the only bank of the sample to miss it (the Cet1 capital was even negative, ndr). A result that, according to via Nazionale depended “in large measure” from the methodology us ed by the Eba that “ill-suited” to a bank like Mps, for whom “deep restructuring”.
Finally, the focus on insurance. Insurance companies in italy are economically strong (on the basis of Solvency2) and a return to profitability in the first half of this year, unchanged from the previous year. Despite this, the evaluations of the market are worsening, but this owes more to the evaluation of macroeconomic risks overall to the individual strengths of the fund.
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