FRANKFURT (Reuters) – Weak profitability is one of the key vulnerabilities of the euro zone’s bank sector and low central bank interest rates will only weaken lenders’ earnings prospects, European Central Bank Vice President Luis de Guindos said on Monday.
“The recent softening of the macroeconomic growth outlook and the associated low-for-longer interest rate environment are likely to weigh further on their profitability prospects,” de Guindos told a conference.
“Many market analysts are concerned about the drag on bank profitability that could result from the negative impact of monetary policy accommodation on net interest margins. And net interest margins are indeed under pressure,” he added.
(Reporting by Balazs Koranyi; Editing by Catherine Evans)