Euro zone banks reporting rising arrears: ECB

Euro zone banks are reporting a rise in arrears on loan payments while the benefit of higher interest margins could also start fading soon, European Central Bank supervisory chief Andrea Enria said on Wednesday.

"Arrears have increased across the board," Enria told a hearing at a European Parliament committee. "The increase in arrears is not unexpected in the current monetary policy tightening cycle."

Enria added that while rapid ECB rate hikes in the past year boosted bank margins and profitability, this effect could fade away as the higher rates are passed through to depositors and some downside risks, mainly credit, valuation, and liquidity risks, materialise. (Reporting by Balazs Koranyi; Editing by Andrew Heavens)