LONDON, (Reuters) – Banks within the European Union have become more profitable over the last quarter of 2021. This was due to government support in times of pandemic, which helped lower the amount of loans that go sour. The EU’s bank watchdog stated Monday.

The European Banking Authority stated in the latest quarter-end “risk dashboard” that although asset quality had improved, there were concerns about loans that have received public guarantees and moratoria. This was not surprising given general uncertainty caused by Omicron, Covid-19, Omicron, and Covid-19.

“Profitability levels have stabilized at higher levels than before the pandemic. Most banks anticipate an increase in operational risk due to cyber-related risks.

NPL, or loans that go sour due to non-performance, dropped 20 basis points quarter on quarter, to 2.1%. Meanwhile, return on equity (a crucial measure of profitability), was 7.7%. It rose from 2.5% in 2020 and 5.7% in 2019.

EBA stated that 15.4% was the core ratio capital-risk-weighted asset in the third trimester of 2013. This is down 10 basis points from the preceding quarter but well above regulatory standards.

EBA results are based in part on the findings of 131 banks, which cover more than 80 percent of EU’s bank sector assets.