ECB: Banks are ready for rising rates

The ECB’s banking supervision division released results Monday of a stress test that showed rising rates would increase net interest income, an important part of bank finances. (Wikimedia commons)

FRANKFURT— The European Central Bank says banks under its jurisdiction appear well-prepared to face higher interest rates.

The ECB’s banking supervision division released results Monday of a stress test that showed rising rates would increase net interest income, an important part of bank finances.

Earnings at some banks have lagged due to the current very low interest rate environment that squeezes the margins between rates at which banks borrow and their lending rates.

The central bank said that in a hypothetical interest rate shock involving an increase of 2 percentage points, net interest income would increase by 4.1 per cent this year and 10.5 per cent next.

Analysts say that as things stand now the ECB is unlikely to raise its rate benchmark from the current zero before 2019. ECB: Banks are ready for rising rates