MNI BRIEF: Early Signs Of Covid Hit To Bank Assets-Lagarde

Early signs of asset quality deterioration in banks' balance sheets as a result of the Covid crisis such as changes in the share of forborne loans and Stage 2 loans are already appearing, but it will take years before the full impact of the pandemic on non-performing loans is clear, European Central Bank President Christine Lagarde said in a speech on Tuesday.

It is still too soon to predict the trajectory of asset quality, and much will depend on the strength of the recovery, Lagarde told the ECB Forum on Banking Supervision, calling for banks to prepare also for more digitalisation and the effects of climate change. Spanish and Italian banking officials have earlier told MNI that growth in NPLs following pandemic disruptions looks set to be less than feared.