Draghi Says EU Banks Still Enjoying the Positive of Low Interest Rates

With euro zone banks still enjoying the positive impact of low interest rates, overcapacity in the financial sector may be the key hurdle weighing on profitability, European Central Bank President Mario Draghi said on Thursday.

“Overcapacity in some national banking sectors, and the ensuing intensity of competition, exacerbates this squeeze on margins,” Draghi told a conference. “Such over-capacity also means the sector does not operate at the efficient frontier, which is one reason why cost-to-income ratios remain high in some countries.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza