Economics
IMF Says Banks Face Profitability Challenge Through 2025
- Fund warns against taking excessive risks to offset low rates
- Banks will need to increase non-interest income, reduce costs
Photographer: Mlesna/E+ via Getty Images
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The International Monetary Fund says bank profitability likely will be under pressure for the next five years due to low interest rates and warned lenders against taking on excessive risks once economies begin to recover.
The assessment is based on a simulation of nine advanced economies, the Washington-based IMF said in an analytical chapter released on Friday as a follow-up to its Global Financial Stability Report published last month. While cost cutting and higher fee income should help, they’re unlikely to fully relieve the pressure, the IMF said.