ECB: Profitability of Eurozone Banks Collapsed in Q2

The European Central Bank said Tuesday that the profitability of the largest banks in the euro area collapsed in Q2 of the year, although banks managed to keep their bad loan balances low.

The bank stated in its quarterly statistics that the return on capital in the first half of the year, the height of the Corona pandemic, was 0.01%, which is sharply lower than 6.01% in the same period a year ago, as no less than seven of the 19 countries in the euro area recorded negative returns.

Meanwhile, the value of bad loans reached 503 billion euros, which is not much more than 501 billion euros in the previous three months, most likely because deferrals of government loans and guarantees helped banks keep the loans as performing.

For her part, European Central Bank President Christine Lagarde said that a second wave of the Corona pandemic heralds a delay in the economic recovery of the eurozone.”We now fear that the containment measures taken by the authorities will have repercussions on this recovery, so instead of the rapid recovery curve that we all look forward to and hope for, we fear that it will make one end of the curve a little more volatile,” she told the Wall Street Journal Forum of Business Leaders in a pre-recording interview.