Low bank profitability remains a concern

Euro banking consolidation remains necessary

The structurally low profitability of the euro area banking sector remains a concern for financial stability and for monetary policy.

Sustained economic expansion over the past six years and greater banking sector resilience have supported financial stability within the euro area.

Recent softening of growth prospects heightens risks.

The financial stability environment has become more challenging than it was a year ago.

The risks that have been with us for some time now – a possible disorderly increase in risk premia, debt sustainability concerns, low bank profitability and imbalances in the non-bank financial sector – are still present, but they are no longer being mitigated by an improving macroeconomic outlook.