LONDON, June 8 (Reuters) - British and Italian banks are expected to see the biggest boost from Europe's rising interest rates, according to a new study, while French and Dutch lenders will see barely any benefit and Swiss and Swedish banks could actually suffer.
Credit rating firm S&P Global (SPGI.N) looked at how 85 of Europe's biggest banks, which have a combined 31 trillion euros ($33.28 trillion) of assets, will fare as the European Central Bank, Bank of England and Swiss National Bank push up borrowing rates.
It estimated that a 2 percentage points rise in rates would increase banks' annual net interest income (NII), which is strongly linked to profitability, by an average of around 18% compared to last year.
British and Italian banking systems stand to benefit the most, with a weighted-average NII impact above 25%.
For Spanish, German, Danish, and Austrian systems, the impact stands between 10% and 16%, in France and the Netherlands it would be less than 10%, while stricter capital rules in Switzerland and Sweden could mean their banks see 29% and 5% declines, respectively.
"The actual upside to NII will also depend on two key factors that are unequal across Europe," S&P's report said. "How far and fast policy rates rise, and the strength of net lending against a weakening economic backdrop."
The current high inflationary environment also will lead to rising operational costs and other credit costs for banks.
Wages for bankers are already rising. In the United States, where inflation started to increase before it did in Europe, banks' "non-interest" expenses jumped 7.2% in first-quarter of this year compared with the year-ago quarter.