Monthly Report ABI
Rising Geopolitical Risks for the EU/EEA banking sector
ABI's Monthly Report on Credit and Financial Market Trends highlights the key economic and financial trends observed in the Eurozone and globally, providing insights into interest rates, loan and deposit trends, economic growth, and confidence levels as of June 2024.
In recent months, market interest rates have shown signs of declining from previous peak levels. This trend precedes the European Central Bank's (ECB) recent decision to lower policy rates by a quarter point.
The six-month BOT rate averaged 3.61% in the first 13 days of June, down from 3.64% in May and 0.45% lower than the peak in October 2023. three-month Euribor rate averaged 3.75%, a decrease from 3.81% in May and 0.25% below its October 2023 peak.The BTP rate averaged 3.93%, up from 3.85% in May but down 1.06% from its peak in October 2023. The 10-year IRS rate, commonly used for mortgages, averaged 2.82%, slightly up from 2.80% in May but 0.69% lower than the October 2023 peak.
Loan Interest Rates
The average rate for new housing loans decreased to 3.61% in May 2024, down from 3.67% in April 2024 and 4.42% in December 2023. The average rate for new business loans fell to 5.21% in May 2024 from 5.30% in April 2024 and 5.45% in December 2023.. The average rate for all loans remained stable at 4.81%.
Deposit Interest Rates
The rate for new fixed-term deposits was 3.51% in May 2024, slightly higher than the Eurozone average. The yield on new fixed-rate bank bonds was 3.52% in May 2024, a significant increase from 1.31% in June 2022. The average rate for all deposits was 1.04%, unchanged from the previous month.
The spread on new operations, which is the difference between rates on new loans and new deposits, was 196 basis points in May 2024.
Non-performing Loans (NPLs)
Net Non-performing Loans slightly increased to €31 billion in April 2024 from €30.5 billion in December 2023. However, they have significantly decreased from the peak of €196.3 billion in 2015. Net NPLs represented 1.45% of total loans in April 2024, slightly up from 1.41% in December 2023.
Macroeconomic Scenario
International trade declined by 0.6% month-on-month in March 2024. However, the global Purchasing Managers' Index (PMI) indicated expansion, particularly in the services sector. The price of Brent crude oil decreased to $83.1 per barrel in May 2024, a 6.7% decline from the previous month but a 9.6% increase year-over-year.
Consumer and Business Confidence
In May 2024, the business confidence index in the Eurozone was -9.9, slightly improved from -10.4 in April. The consumer confidence index was -14.3, a marginal improvement from -14.7 in the previous month.
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https://www.abi.it/studi/abi-monthly-outlook/
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