Interview with Luis de Guindos, Vice-President of the ECB, conducted by Ruben Mooijman and Ariane van Caloen, on 23 November 2023

29 November 2023

Please note that the interview was conducted in English and translated into Dutch and French. In case of discrepancies between the versions, the English version prevails.

What would you say to those who think that banks are making excessive profits?

The ECB’s latest Financial Stability Review, which has just been published, indeed shows that bank profitability has risen sharply. This improvement can be attributed to the widening of interest rate margins. The return on equity of euro area banks now stands at around 10%, whereas in 2019, barely five years ago, it stood at 4%. So it has clearly improved.

Still, this is something of an illusion − it is after all a short-term improvement. In the long term, we expect profitability to fall again. Why? There are several factors. First, the economy is slowing, which will lead to higher default…