Translating EURIBOR increases into improved banking margins: Differential timing on asset and liability repricing
Fecha: septiembre 2022
Marta Alberni, Ángel Berges and María Rodríguez
The historical evidence-backed convention indicates that the banks’ net interest margin gets squeezed far more during times of low rates, and certainly during periods of zero or negative rates, as has been the case in the eurozone for more than five years. By this logic, the Spanish and European banks’ margins should improve within the context of the new, positive interest rate environment. The most important curve for the retail banking business is 12-month EURIBOR, which is currently trading firmly in positive territory, at around 1%, after more than five years in negative terrain. However, rate increases will not translate into higher net interest income (NII) in a linear fashion.