An estimation of the Italian banking sector profit rate in a crisis period

Abstract

In this paper an attempt is made to calculate the profit rate of the banking sector in the period following the 2007–2008 financial crisis, in order to compare it with that of other real productive sectors. Various techniques are used, highlighting the differences between the results of national accounts data—on which the GDP calculation is based—and those of the central bank. This paper studies the problem of this difference on Italian data and offers a possible explanation, which confirms some analysis (Banque de France on French data) related to an earlier period. The second step in the analysis is directed at comparing bank profit rate and the productive profit rate. The result is that the bank profit rate has been surprisingly low in recent years, due to a decrease in net interest income, an increase in capital and an increase in non-performing loans. However, since 2021, bank profitability has improved greatly, thanks in part to institutional interventions.