ANKARA

The majority of banks in Europe are likely to experience only a gradual recovery in revenues because of virus-driven economic shock, international ratings agency Fitch Ratings said Thursday. 

Prospects are still generally weak despite early signals of a fairly strong economic rebound in some countries, the agency said in its “Large European Banks Quarterly Credit Tracker.”

The agency noted lockdown measures and a weak macroeconomic environment took a heavy toll on revenues across most banking businesses.

It said many banks continue to increase provisions for expected credit losses and revenue from capital markets activity, and that profitability would remain depressed in the third quarter.

“Impaired loans are set to rise significantly in the rest of 2020 and 2021 as support measures for borrowers are phased out and the extent of the damage to the economy becomes more apparent,” it said.

Of the 20 banks covered in the tracker, 15 are on rating watch negative or negative outlook, signaling increased risk that their ratings could be downgraded in the near-to-medium term.

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