Bank of Italy: “Slight recovery in the first quarter. High rates are holding back loans”

MILAN – After the slowdown towards the end of 2022, the Italian economy should return to progress in the first quarter. This is what highlights the Bank of Italy in its economic bulletin. “According to our models, economic activity in Italy increased slightly in the first quarter of 2023, supported by the manufacturing sector, which benefits from the decline in energy prices and the easing of bottlenecks along the supply chains”. “Household spending would have remained weak, in the face of still high inflation”, adds Via Nazionale.

High rates curb lending

Via Nazionale in its document therefore dwells on the issue of the rise in interest rates, responsible for the slowdown – in the months between 2022 and 2023 – in loans from Italian (and European) banks which, however, can count on much more capital strengthened and a stable deposit base. From reading the Economic Bulletin it is also clear that there is no problem of capital losses on the government bond portfolio, also considering the good numbers on liquidity. Furthermore, underlines the central bank, “more than half of the total amount of bank deposits held by customers was protected by national guarantee systems”.

Svb and Credit Suisse crisis limited impact on Italian banks

As for the crises they touched Svb And Credit Suissein Italy – notes Bankitalia – “the impact of the tensions following” the collapses of credits Suisse and Svb “was in line with that of the rest of the European banks, and overall contained”. According to the Bank of Italy according to which ” after having suffered a decline of about 15 percent in the days following the bankruptcy of Svb, in the following weeks share prices rose by 8 percent and at the end of March they were up 17 percent compared to the values ​​at the beginning of the year “.

For the Via Nazionale experts, “the ratio between the market value and the book value (price-to-book ratio) of the major listed Italian banks stood at 70 per cent on the same date (from 75 at the beginning of March), while expectations of analysts on the one-year return on equity (ROE) remained essentially unchanged, at around 9 per cent.The yield differential between Italian bank bonds and risk-free rates widened by a similar amount to the euro area average”.