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Business and Economics > Banks and Banking

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Cover IMF Working Papers
Bank Profitability in Europe: Not Here to Stay
Ruo Chen
,
Vincenzo Guzzo
,
Fazurin Jamaludin
,
Adil Mohommad
,
Ritong Qu
, and
Yueshu Zhao
Slower passthrough of policy interest rate hikes to deposit rates relative to their loan rates has led to sharply wider bank net interest margins. Combined with resilient asset quality, wider net interest margins supported record profits for European banks in 2023. Drawing on historical data from the balance sheets and income statements of over 2,500 European banks, this paper shows that abnormally high profits are expected to fade soon as interest income will decline, once policy rates start being lowered, while higher impairment costs historically have weighed on profits with a lag. Moreover, a number of structural factors that have eroded the performance of European banks in the past two decades have largely remained unaddressed and will continue being a drag on profits and capital. Therefore, policymakers should encourage banks to preserve capital buffers and build resilience to future shocks, while exercising caution when considering taxes on profits or other measures that could divert potential sources of capital from banks.
Keywords:
European banks; bank profits; interest rate margins; asset quality; bank capital; bank taxation.; bank profit; interest rate margin; bank taxation; impairment cost; Bank soundness; Financial statements; Income; Yield curve; Central bank policy rate; Europe; Global
Cover IMF Staff Country Reports
Republic of Armenia: Third Review Under the Extended Arrangement, and Request for Waiver and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Republic of Armenia
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Armenia’s Third Review Under the Extended Arrangement, and Request for Waiver and Modification of Performance Criteria (PC). Growth in Armenia is expected to remain subdued as recession in Russia continues and as the base effects of the 2015 one-off factors dissipate. The program performance has been broadly satisfactory. All end-December 2015 PCs, except for the fiscal deficit PC, and all the continuous PCs were met. The fiscal deficit PC was missed by 0.3 percent of GDP. The IMF staff supports completion of the review and the authorities’ request for a purchase in an amount equivalent to SDR 15.65 million.
Keywords:
ISCR; CR; government; broad money; economic activity; bank credit growth; CBA; state company; government plan; authorities estimate; financial markets condition; reform agenda objective; Tax law; Global; Eastern Europe
Cover IMF Staff Country Reports
Bolivia: Second Review Under the Stand-By Arrangement and Request for Waiver of Applicability and Modification of Performance Criteria—Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Bolivia
International Monetary Fund
Bolivia’s pursuit of structural reforms has begun to yield results despite the difficult social and political context. The fiscal performance under the program needs to be substantially strengthened. The recent passage of the informal corporate workout law represents a substantial advance in financial and corporate restructuring. Executive Directors are in agreement with the government on the approach to reduce banking system fragility. To sustain economic growth, the pace of structural reforms has to be invigorated. Firm implementation of the program can achieve its goals.
Keywords:
ISCR; CR; CPI inflation rate; September; financial system deposit; lender of last resort facilities; deficit; tax regularization scheme; reform agenda; Exports; Commercial banks; Tax law; North America
Cover IMF Staff Country Reports
Burkina Faso: Statistical Annex
International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Keywords:
ISCR; CR; tax; net; tertiary sector; money market; central bank; primary sector; value-added tax; public enterprise; personal income; GDP deflator; Agricultural commodities; Tax law; Credit; Income and capital gains taxes; Imports; West Africa; Western Hemisphere
Cover IMF Staff Country Reports
Chad: Statistical Annex
International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Keywords:
ISCR; CR; private sector; gross income; single tax; Chadian authorities; turnover tax; banking system; factor income; export tax; Income; Agricultural commodities; Tax law; Public expenditure review; Consumption taxes; Africa