Eurozone banks dodge Covid bullet, but vulnerabilities remain

The banking sector has proved resilient during the pandemic, and eurozone banks will continue to play a significant role supporting the near-term recovery. That said, a sustained virtuous cycle between banks and the economy looks unlikely in our view.

What you will learn:

• Eventually, eurozone banks will have to deal with long-lasting weak profitability.
• Sector fragmentation means cost efficiencies remain limited, while revenue prospects are constrained by low interest rates and a relatively flat yield curve.
• Corporate fragility remains high in the sectors more heavily impacted by the pandemic.