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Banks Focus On Costs And Profitability As Interest Rates And Risks Persist

by THEFUTURE.TEAM

March 24, 2026

Banks are entering the next three-year cycle focused on reducing operating costs while maintaining stable profitability. This approach supports dividend distribution and strengthens balance sheets, liquidity and capital positions.

Geopolitical Risks And Banking Strategy

Internal strategy remains important, but performance will also depend on external conditions, particularly developments in the Middle East. Ongoing uncertainty in the region could affect market conditions and indirectly impact banking activity.

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Inflation, Interest Rates, And Economic Dynamics

Inflation and interest rates remain key factors for the sector. Prolonged geopolitical tensions could push energy prices higher and disrupt supply chains, adding to inflationary pressures. In that scenario, the European Central Bank would face more complex policy decisions. Interest rates could remain elevated or increase further, depending on inflation trends.

High Interest Rates: A Double-Edged Sword

Higher interest rates are expected to support banks’ net interest income and overall profitability. At the same time, they may increase pressure on borrowers and raise the risk of non-performing loans.

Bank of Cyprus CEO Panicos Nicolaou said the bank’s loan portfolio remains supported by strong liquidity, particularly in sectors such as tourism, where clients maintain cash reserves.

Profitability In A Challenging Environment

Data from the Central Bank of Cyprus show that profitability declined slightly in 2025, mainly due to lower net interest income. However, the broader trend reflects resilience. Periods of low interest rates have been linked to weaker earnings, while higher rates in 2023 and 2024 supported stronger revenue growth.

Diversifying Revenue Streams

Banks are also expanding beyond interest income. Investments in areas such as insurance are aimed at creating more stable revenue streams and reducing dependence on monetary policy.

Outlook: The Impact Of Geopolitical Shocks

According to Jefferies, geopolitical developments could push inflation and interest rates higher. A 50 basis point increase in rates could raise pre-tax profits by around 3%, although credit risk costs could increase by approximately 17%. The impact is expected to vary across banks. Institutions with greater exposure to housing and consumer lending may benefit more, while those linked to industrial sectors could face higher risk. Greek banks, including Piraeus Bank, Eurobank, National Bank and Alpha Bank, are projected to see pre-tax profit increases ranging from around 2.5% to 5.8% under such conditions.

Banks are adjusting their strategies to balance profitability with risk, as interest rates and geopolitical developments continue to shape the outlook for the sector.

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Meta’s $18 Billion Settlement Limits State Claims Over Children’s Data

by News Editor

August 28, 2026

Meta’s $18 billion settlement with attorneys general from 29 U.S. states includes a provision limiting future state claims over the company’s use of children’s data for age-assurance systems.

Under the agreement, Meta must develop, train and begin testing a system to identify users under 13 within a year of the settlement taking effect. The company already uses AI-based age-detection tools, although the agreement does not require the new system to use AI.

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States Agree To Limits On Future Claims

The Children’s Online Privacy Protection Act (COPPA) generally restricts the collection and retention of personal data from children under 13. Under the settlement, the 29 state attorneys general agreed not to bring past, present or future claims under COPPA or similar state laws over the specified use of children’s data.

Meta will not be permitted to use information from users under 13 for advertising, marketing or algorithmic optimisation.

Federal Enforcement Remains Unclear

COPPA is primarily enforced by the Federal Trade Commission, which is not a party to the agreement. That leaves open the possibility of separate federal action over how Meta collects or uses children’s data.

Another issue is whether Meta can keep age-assurance data isolated from its other systems. An independent auditor will monitor compliance, but the settlement does not fully specify what data Meta can retain for training, how long it can be stored or whether derived insights can be used elsewhere.

Legal Risks Remain

Joshua Wurtzel, a partner at Schlam Stone & Dolan, said states could still pursue claims if Meta uses the data outside the settlement’s limits. Such cases could depend on how those limits are interpreted.

Peter Jackson, a data and intellectual property attorney at Greenberg Glusker, said the provision could “disincentivize future enforcement actions.”

The agreement gives Meta greater legal certainty around using children’s data for age assurance, but questions remain over federal enforcement, data retention and secondary use.