alleryStart learning →Why are non-performing loans a major concern for the banking sector?
AThey raise the bank's fee income
BThey lower reserve requirements
CThey reduce the bank's profitability
DThey shorten deposit maturities
Answer & Solution
Correct answer: C. They reduce the bank's profitability
Loans that are not repaid stop earning interest and force provisions, which cuts into the bank's profit.
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