Coverage: Q2 2026 · Information to 25 September 2026
TGB Premium Intelligence · Subscriber Edition
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Published: 25 September 2026 | Region: Europe | Country: Italy | Coverage: Q2 2026 (April–June 2026) | Classification: Premium Intelligence
Desk view — Italy, Q2 2026
- Italian banks remain among the most profitable in the euro area. ECB data show a 14.94% return on equity for Italian significant institutions in Q2 2026, down from 16.08% a year earlier.
- Asset quality kept improving. The NPL ratio fell to 2.07% from 2.45% a year earlier, and Intesa Sanpaolo’s net NPL ratio reached 0.8%.
- Lending growth picked up. Loans to the private sector grew 3.3% year on year in June 2026, with households at 2.7% and firms at 3.2%, according to the Bank of Italy.
- The ECB’s two rate rises, to 2.25% in June and 2.50% in September, support margins. But inflation of 3.0% in June and a higher IRAP rate for financial intermediaries under the 2026 Budget Law weigh on the outlook.
- Consolidation is reshaping the sector. Monte dei Paschi now reports with Mediobanca and BPER with Popolare di Sondrio, and the number of Italian significant institutions fell from 12 to 10 in a year.
Executive summary
Italy’s banking system went through the second quarter of 2026 in strong shape. Profits were high, the NPL ratio fell to 2.07% and capital ratios sat well above requirements. Italian significant institutions earned an annualised return on equity of 14.94% in Q2 2026, according to the ECB’s supervisory statistics. Among the euro area countries for which the ECB publishes the figure, only Spain, Austria and Latvia reported a higher return on equity. Their cost-to-income ratio was 46.08% and the cost of risk 0.32%. Intesa Sanpaolo reported its best-ever half year, and the mid-sized groups — Banco BPM, BPER and Monte dei Paschi — all reported record or sharply higher profits.
The environment is changing, though. Italian inflation was 3.2% in May and 3.0% in June, with regulated and non-regulated energy prices accelerating. The ECB reversed course with a 25 basis-point rise in June and another in September. Higher rates will support net interest income after a period in which the aggregate net interest margin slipped from 2.14% to 2.05%. But they also raise borrowing costs for an economy growing only 1.0% year on year and add to the cost of servicing a large public debt.
Lending is recovering modestly. Loans to the private sector grew 3.3% in June 2026, from 3.1% in May, with lending to households up 2.7% and to non-financial corporations up 3.2%. The fiscal environment has become less friendly: the 2026 Budget Law raised the IRAP regional tax rate for financial intermediaries from 4.65% to 6.65% on a temporary basis. For now, earnings strength absorbs these costs comfortably. The main strategic theme is consolidation, which has cut the number of Italian significant institutions from 12 to 10 in a year.