U.S. Markets

Euro zone bank profitability may weaken on slowdown: ECB

FILE PHOTO: Vice-president of the European Central Bank Luis de Guindos attends a news conference in Vilnius, Lithuania June 6, 2019. REUTERS/Ints Kalnins

FRANKFURT (Reuters) - Profitability across the euro zone bank sector is low and weakening growth could further dampen the sector’s prospects, European Central Bank Vice President Luis de Guindos said on Tuesday.

Negative ECB rates are not the cause of the weakness as super easy monetary policy has so far had a neutral effect on bank profits, de Guindos told a conference in Rome.

“Nevertheless, the overall effects of negative rates on the banking sector need to be carefully monitored, particularly because the balance of their effects will depend on how long rates remain in negative territory,” he added.

Reporting by Balazs Koranyi; editing by John Stonestreet