An apparent turnaround by what has been Europe's most troubled and indebted bank, Monte dei Paschi di Siena, is one of several indications that Italy's banking sector might finally be seeing a light at the end of the tunnel.

In 2016, the Italian banking sector was seen as one of the weakest in Europe with almost a fifth of all loans totaling 360 billion euros (400 billion U.S. dollars) classified as problematic. And things did not improve much after that.

A year ago this month, for example, U.S. rating company Fitch predicted that despite some improvement, the high percentage of non-performing loans held by Italian banks could continue to weaken the banking sector for years. Even more recently, an assessment report from Germany's Deutsche Bank identified Italy's "fragile" banking system as one of the economic threats to the European Union (EU).

Now, months later, things are looking much more optimistic.

The big story comes from Monte dei Paschi. Founded in 1472, the bank is the world's oldest continually-operated financial institution and was Italy's third largest bank in terms of assets for years until slipping to eighth place where it now stands.

Monte dei Paschi, at risk of declaring bankruptcy before a massive 8.1-billion-euro bailout from the Italian Treasury, reported a larger-than-expected quarterly profit of nearly 190 million euros this month. The bank's shares, which at one point last year had fallen 98 percent from their all-time peak, shot up 15 percent in a single trading session.

Other banks have also performed well. UniCredit, the country's largest bank, reported its highest-ever quarterly profits, earning 1.1 billion euros in the first quarter of this year, nearly 23 percent more than in the same quarter a year earlier. The country's second largest lender, IntesaSanPaolo, was even more profitable in the first quarter, raking in 1.25 billion euros.

"Italian banks have benefitted from growing strength in the Italian economy, in improving their portfolios to get rid of non-performing loans, and reducing costs," Marina Brogi, an economist with Rome's La Sapienza University, told Xinhua.

Ruggero Bertelli, a bank management professor with the University of Siena, said in an interview that banks should continue to reduce costs and increase profit margins, something that will be easier as the government reduces the national deficit.

But that may not work out. Negotiations for the next government include a 100-billion-euro plan to cut taxes and increase government spending. The two main parties in the talks also say they will ask the European Central Bank (ECB) to forgive 250 billion euros in debt, but that idea is unlikely to gain much traction.

Issues still remain. In its latest rankings, the World Economic Forum places the overall health of Italian banks at number 116 in the world out of the 137 countries ranked, well behind China, India, Nigeria, and Mexico.

But Marcello Messori, a political economist at Rome's LUISS University, said it is probably safe to say the worst is in the past for Italian banks.

"If Italian banks were like a patient, we could say the patient is out of the emergency room and after a period of time, out of the hospital," Messori told Xinhua. "He is at home recovering now, but is still not quite healthy enough to resume a full schedule." (1 euro = 1.18 U.S. dollars)