The European Central Bank warned on Thursday that banks need to boost their profitability and business models amid the risks that the sector faces.
The high level of non-performing loans across the euro area and geopolitical uncertainty, including the British departure from the European Union are "major risks" to the banking sector, the ECB said in its annual report on supervisory activities.
"(Banks) have become much more resilient over the past few years; their capital buffers have increased significantly," Danièle Nouy, chair of the Supervisory Board at the ECB, said in the report, adding however, they still face risks and challenges.
ECB officials are closely following how the most exposed banks to Brexit are monitoring the risks. Until now they have not identified significant funding or operational risks, but the political uncertainty could harm investments, the central bank said in the report.
Reference: CNBC
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