to the resident private sector continued to fall in 2015, albeit at more moderate rates than in 2014, both for households and for non - financial corporations. for the latter the fall in credit progressively eased, with the rate of decline for smes ( - 2. 8 % ) appreciably lower than that for credit to large corporations ( - 6. 4 % ). non - performing loans continued to decline in 2015, falling by more than €37 billion ( against the fall of €24 billion in 2014 ). at end - 2015 the proportion of npls on spanish banks ’ balance sheets was 22 % down on the previous year. this trend has been seen both in credit to non - financial corporations and in that to households. profitability is unquestionably a fundamental challenge facing european and spanish banks. in 2015, consolidated income at the global level for the sector as a whole was close to €14 billion, almost 13 % down on the previous year ; and the return on equity fell from 6. 9 % in bis central bankers ’ speeches 2014 to 5. 6 % in 2015. in terms of domestic business, profitability was worse than for consolidated activity at the global level, with the roe in 2015 standing at 4. 4 % ( against 5 % in 2014 ). the main factor bearing down on the sector ’ s profitability may be said to be the environment of very low interest rates, and this environment might be expected to hold as long as inflation expectations justify the highly expansionary monetary policy stance in the euro area. the spread between the return on assets and liabilities in domestic business is at levels very close to all - time lows. also, there is little room for further downward movement as regards the cost of funds ; accordingly, if asset - side rates continue falling, net interest income may continue declining. but we should mention another two factors bearing down on profitability. on one hand, a stilllow level of banking activity ( as credit continues to fall ). on the other, the significant volume of non - productive assets ( non - performing and foreclosed ) still on bank balance sheets, although it is true that non - performing assets are declining notably, which translates into fewer provisions and an improvement, therefore, in results. against this backdrop, efforts to cut costs and bring about efficiency gains are of particular importance. lastly, it should be stressed in connection with banks ’ solvency that the maximum - quality capital ratio, namely cet1, has increased

euro area annual inflation is expected to rise to 10 % in september. this means that average inflation during the third quarter stood at 9. 3 %, a figure somewhat higher than anticipated in the ecb's last forecast exercise ( 9. 1 % ). 3 more importantly, euro area inflation is expected to remain above 9 % during the fourth quarter. the rise in energy and food prices is the main factor behind the high levels of inflation in the region. the depreciation of the euro has also contributed to upward price pressures, particularly by increasing the price of commodity imports. specifically, according to the flash estimate, the price increases over the past year in the energy and food components of the consumer price index stood at 37 % and 11 %, respectively, in september. these two components account for almost 70 % of the increase in consumer prices in the euro area over the past year. nonetheless, inflationary pressures are also spreading to the less volatile components of the consumer basket. underlying inflation, which excludes food and energy consumer prices, is expected to hit 4. 8 % in september. this is more than double the figure recorded at the beginning of the year ( 2. 3 % in january ). in this case, certain pandemic - related factors may have facilitated a faster than expected pass - through of inflationary pressures. first, the bottlenecks i referred to earlier, which since 2021 have constrained the supply response to growth in demand. but also the strong demand for home renovation or, more recently, the rapid pace of resumption of activities involving more social contact, after two years of demand constraints. 4 moreover, the labour market has so far performed relatively robustly in europe, an issue i will come back to later. in this context, and in view of the escalation of the energy conflict with russia, we expect the inflationary episode in the euro area to be more intense and longer - lasting than we initially thought before the summer. this is reflected in the latest ecb staff forecasts, which, https : / / ec. europa. eu / eurostat / documents / 2995521 / 14698140 / 2 - 30092022 - ap - en. pdf / 727d4958 - dd57 - de9f - 996599562e1286bf these projections were published on 8 september, with a data cut - off date of 22 august. pacce, del rio and sanchez ( 2022