| Popis: |
THE EU banking systems are facing major changes in the form of increased competition, concentration and restructuring. These changes are triggered by a number of factors including technological change, financial liberalisation and internationalisation. The circulation of the single currency is expected to reinforce these trends. Although the banking industry is in a state of flux, it is possible to discern some overall patterns in the actions and strategies of individual banks. The effects of these responses are mainly reflected in changes in the structure of bank income and, in particular, in the increasing incidence of non-interest income. The analysis of the shift towards noninterest income provides key information for evaluating the extent to which this process could affect banks’ profitability. Profits have become the driving force in market economies. Many banks are keenly interested in earning maximum profits to provide the highest possible return to their shareholders and secure additional funds to support long-term growth. As the EU banking industry continuously evolves, changes in industry composition and the macroeconomic environment have a direct impact on the aggregate performance of the industry. If banks’ profitability becomes more volatile, banking is more risky unless the level of profitability raises substantially. So, there is a clear connection between profitability volatility and banking stability; a high level of profitability volatility is a source of instability in the banking system, augmenting the possibility of bank failures. A move to more interest rate sensitive assets like securities and to off-balance sheet instruments, along with more prone to default assets, like consumption credit, may increase the profitability’s volatility and so the stability and soundness of the banking system. The changes in the banks’ income structure and the determinants of profitability deriving from developments in the banking business will have clear implications on the activity of banking supervision. |
