MNI BRIEF: ECB Buch Warns Tariffs May Hit Bank Profits

Higher tariffs could hit bank profitability more than the sector currently expects, the chair of the ECB's supervision board Claudia Buch warned on Monday.

"Banks are anticipating only a slight decline in profitability in the coming years but higher tariffs may lead to a stronger economic slowdown, higher loan-loss provisions and lower profitability," she told the European Parliament's ECON Committee.

Buch noted that there remain "pockets of vulnerability" to non-performing loans within the banking sector despite an overall improvement.

"They are smaller financial institutions that still have a relatively high exposure to NPLs," she said. (See MNI: BOE FPC Highlights Risks From Tech Equities Overvaluation)