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"We anticipate persistently weak profitability for Italian banks in the next few years".
This paper explores the root causes of weak profitability on two levels.
Not only do they regard this as a blow to national pride; foreign crews also cost more.Their weak profitability, coupled with ambitious plans to expand capacity, leaves the mainland carriers exposed to even a temporary slowdown in traffic growth.
The retreat has led some analysts to worry that J. P. Morgan will lag behind its competitors once the economy comes back -- and that if the downturn continues the bank's already weak profitability may lead it to look for further savings.
It noted that despite further measures imposed on a few specific banks, concerns about NPLs and weak profitability in a period of low interest rates, Italian banks had "come under intense market pressure, losing over 40% of their market value this year".
Moody's, a credit-rating agency, downgraded the bank by two notches earlier this year to low AA, partly because of its weak profitability and over-reliance on volatile trading revenues.In this section Man of the hour Knowledge gap Blossoming in Japan Britain's banking battle Bugs The trader's lament Sliding Basle bust-up ReprintsBut another factor in the downgrade was strategic wobbling.
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The head of commercial banking at a large German bank says he is expecting his clients to have their credit ratings cut by an average of three notches because of weaker profitability and diminished reserves.
"In a quarter which was characterized by increased investor uncertainty and higher market volatility, Deutsche Bank's investment banking business followed the industry-wide trend of weaker profitability," the chief executive Josef Ackermann said in a statement.
The downgrade to junk status, Moody's said, "reflects our view that MF Global's weak core profitability contributed to it taking on substantial risk in the form of its exposure to European sovereign debt in peripheral countries".
The company posted a disappointing set of results for the fourth quarter of 2007, when it seemed less able to get a handle on costs and weak refining profitability.
We find that firms with more preoccupied independent directors have declining firm valuation and operating performance and exhibit weaker M&A profitability and accounting quality.
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