June 14, 2019
FRANKFURT (Reuters) – The European Central Bank’s negative deposit rate has so far had a neutral impact on bank profitability, ECB President Mario Draghi said in a letter to a member of the European Parliament on Friday.
“The negative impact on banks’ net interest margins has been offset by an improvement in the economic outlook that has led to an increase in the total volume of loans and, moreover, improved credit quality, which has reduced provisioning costs,” Draghi said.
He added that the ECB would “carefully” monitor the impact of negative rates, especially since their impact hinged on how long rates stay record low.
(Reporting by Balazs Koranyi; Editing by Mark Heinrich)