Page 37 - Annual Report 2023
P. 37
ANNUAL REPORT 2023 37
Geopolitical risks will be an ongoing threat and banks must devote an increasing
share of their attention to geopolitical risks in 2024. The past few years have
highlighted the vulnerabilities financial institutions and other companies face due to
political tensions throughout the world. Armed conflicts and ongoing border disputes
will continue to disrupt trade flows and financial linkages.
Looking ahead, the European and US banking sector is facing several challenges
that require enhanced vigilance. While the fast-paced rise in interest rates has so
far benefited banks’ profitability, the higher interest rate environment is expected
to increase both the volatility of some funding sources and banks’ funding costs in
the medium term, just when substantial amounts of central bank funding are to be
replaced. During 2023 BKT took immediate measures in order to decrease duration
and invest in IR-Swap in order to reduce the above possible impact.
The growth outlook for the euro area remains subject to high uncertainty in the
context of tighter financing conditions and heightened geopolitical tensions, while
future energy and food price paths are subject to upside risks. Inflationary pressures
are further shaping the challenging environment, and weak euro area growth is
expected to persist over the near term.
