On Monday 23 October, the European Central Bank (ECB) published its report on developments in the financial structures of the eurozone for 2017, in which it notes a continued consolidation of the European banking sector.
The report highlights the expansion of the financial sector of the eurozone, which stood at nearly €76.2 billion in March 2017 compared to €70.8 billion in December 2015. Between 2008 and 2016, the size of the financial sector grew from 5.3 to 6.4 times the gross domestic product of the eurozone, the report states.
With the importance of the non-banking sector growing continuously since the start of the financial crisis, the report states that this tendency seems recently to have halted. In parallel, the number of banks in the eurozone banking sector continued to fall in 2016, standing at 5073, compared to 5474 at the end of 2015.
“The profitability of the banking sector remained relatively low during the year as structural inefficiencies continue to hamper profitability in many countries”, the monetary institute however adds. Although the median non-performing loans (NPL) ratio continued to fall in 2016, with significant drops in the Estonian, Irish, Lithuanian, Maltese and Slovenian banking systems, the NPL ratios remain high in several eurozone countries, underlining the need to continue efforts in this direction in order to free up banks' capital. (Original version in by Marion Fontana)