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Eurozone banks still face profitability squeeze, credit risk: Nouy

A euro sign sculpture is seen in front of the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, on Thursday, July 3, 2014.

[FRANKFURT] Eurozone banks continue to face a squeeze on their profitability due to weak growth and volatile financial conditions, so many have to review their business models to remain profitable, Europe's top regulator said on Thursday.

"While prices of financial assets are rising, real investments in the euro area remain relatively low," Daniele Nouy, the head of the ECB's supervisory arm, said. "If we also factor in the persistent low interest rate environment, it becomes clear that banks will have to review their business models in order to stay profitable," she said.

Nouy added that some banks within the euro area still face significant credit risk so a focus on non-performing exposures and concentrations of exposures in areas like real estate are likely to remain a key priority.