Zero Rates are Putting European Banks in Jeopardy

The German economy is doing well but the country’s banks are suffering due to zero rates. Commerzbank, the country’s second largest bank after Deutsche Bank, announced declining results with its net profit collapsing from €1 billion in 2015 to €279 million in 2016. And Deutsche Bank announced a loss of €1.4 billion, due in part to several fines, but also, like Commerzbank, to low interest rates that made its turnover plunge 10% lower, to €30 billion. Another country that is doing well, the United Kingdom, has its largest bank, HSBC, announcing a drop of 82% in net profit ($2.48 billion in 2016, $13.52 billion in 2015), notably due to lower rates. The pound Sterling doesn’t differ from the euro in this regard. In Europe, on average, two-thirds of the net turnover for banks comes from margins on interest – the difference between the rate charged to the customer and the rate at which the bank refinances itself. Of course, with zero rates, this margin is being crushed. Even...

from GoldBroker.com https://www.goldbroker.com/news/zero-rates-are-putting-european-banks-in-jeopardy-1088