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European Banks Face $34 Billion Coronavirus Hit, Goldman Says

European banks will see about 30 billion euros ($34 billion) erased from their net income over the next three years as a result of the fallout from the coronavirus, analysts at Goldman Sachs Group Inc. estimated, Bloomberg reports.

The profit erosion, equivalent to 7% of their total, will be driven by increased credit risk, weaker revenue and broadly flat costs, analysts including Jernej Omahen and Jean-Francois Neuez wrote in a note Tuesday.

The Stoxx 600 Banks Index rebounded 5.3% from a market-wide sell-off on Monday that dragged the gauge down 11% amid concerns over the coronavirus and bad loans after the price of oil plunged. Banks also face the prospect of seeing their margins squeezed by cuts to already-low interest rates as central banks attempt to lessen the economic impact of the virus outbreak.

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