Thread by @CNBCJou

Eurozone Banks (thread): been covering earnings season again; a few takeaways:

Let’s start with positives:
1- Banks much better capitalized & have built up much bigger liquidity buffers in the last few yrs
2- There has been progress on cost cutting but..

Now for the negatives:

Negatives:
1- You can’t cut ad finitum without compromising on core businesses. Cost / Income ratios still too high namely because revenues aren’t growing enough/ at all in some cases
2- Low / negative interest rates eat away at margins (even if volumes go up)
3- Too.Many.Banks

More than 6000 banks operate in the EU ; some of which are implicitly grteed by state and are non-economic players eating into others’ margins. BUT
4- Cross Border mergers are extremely difficult to achieve in this regulatory environment & lack of progress on banking union

5- European Banks’ share of investment banking activity has declined , activity muted so has been more of a push to the “safer but boring” fee generation business
6- Threat of fintech to retail entails cost outlays for digitization ..but takes time to see a return on investment

7- Add to that macro uncertainties , businesses, corporates, consumers all postponing borrowing decisions due to brexit and manufacturing downturn
8- Still in some cases legacy issues& governance qs on money laundering (eg Scandi Banks)

All this while Eurozone is growing 🙄