The International Monetary Fund holds "profitability concerns" for Germany's banking sector, Michaela Erbenova, head of financial supervision, told IMF Survey Magazine. Low, and now negative, interest rates are exacerbating industry profitabilityErbenova said that, "in principle, low interest rates help boost credit demand and stimulate economic growth, so they are positive from an overall macroeconomic perspective. "However, German banks' business models are vulnerable to low interest rates. "This is because most German banks have businesses based on maturity transformation with a large number of branches and high overhead costs. Net interest income is the most important component of their profits. "So far banks have proven unwilling, or even legally unable, to pass on the negative interest rates to depositors, while their assets have recently started to reprice to lower interest rates. "This is squeezing their interest margins leading to profitability concerns absent major restructuring."