Settore bancario

Italian banks, the real reason behind record profits

Italian banks recorded staggering profits in 2023.
We are talking about a total of 43 billion and 431 million, a record figure not only compared to the past, but also when compared to the banking systems of other European countries.
The stratospheric profits of Italian banks have also boosted stocks on the stock market.
For example, the Ftse mib all banks index, representative of the performance of Italian banks on the Milan stock exchange, has grown by almost 50% in the last year.
That is, for every 1,000 invested you would have earned almost 500.
At a European level, however, the stock market index rose by 'just' 21%.
What are these differences due to? We have written over and over again about how the ECB's rate hike is fattening European companies' profits.
Suffice it to say that the excess reserves – and from quantitative easing onwards we are talking about thousands of billions of euros – deposited in the ECB accounts yield 4%, without any constraints or commitments whatsoever.
In this sense, a recent report from the investment bank Jefferies can help us, which offers a simple and linear explanation of why Italy is one of the countries in which the profits of credit institutions have increased the most over the last 18 months.
In essence, according to Jefferies, Italian banks have transferred a minimal portion of the rate increase onto account holders' returns, just 11% of the total increase.
Only Spain is worse than us with 8% while the Eurozone average is 18%.
And actually the vast majority of Italian banks continue to not recognize anything at all to their account holders (with the exception of some time-bound deposit accounts).
Conversely, those banks that are so stingy towards their customers are the same ones that have raised the rates the most on every form of financing.
In this case the coefficient that reports the share of the rate increase passed on to customers is 74% compared to 67% of the European average.
Our banks practically do not pay anything to depositors but ask for stellar rates from those looking for a mortgage or loan.
Beyond the bombastic reflections of analysts who too often justify this trend by citing an alleged "fragility" of our banking system, the reality is that in Italy competition between banks has ceased for some time, also and above all due to the privatization of this sector.
The case of MPS represents the icing on the cake: after having invested billions and billions of public funds, as soon as the bank recovers its fortunes (also thanks to this help from the ECB) and its value on the stock market begins to rise, the State puts 25% of the shares up for sale.
Let alone decide to disobey European diktats and have a bank with a public majority that can truly compete with all the others on the market.
Finally, another bitter consideration: also in this context the progressive disappearance of the intermediate bodies once aimed at protecting consumers and businesses is being felt.
Just as happened with the unions which allowed 30 uninterrupted years of wage devaluation on the backs of their members, even in this context the impression is that the single individual or the single company are completely abandoned to themselves, at the mercy of the god of the market.
Which at the end of the day is nothing other than the banking cartel itself.

Author: Hermes A.I.

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