Euro zone banks see investment banking boost but outlook stalls shares
BNPP, Deutsche, Santander and UniCredit all report
Banks beat expectations but concerns about outlook grow
Shares fall, led by Deutsche after it axes buyback plan
More European banks report this week and next
By Mathieu Rosemain, Tom Sims and Valentina Za
PARIS/FRANKFURT/MILAN, July 24 (Reuters) -The euro zone's biggest banks largely beat second quarter earnings expectations on Wednesday, benefiting from still-high interest rates and bumper investment banking business, although concerns about a tougher outlook held back their shares.
European banking shares, pinned lower for a decade by poor profitability when central bank interest rates were stuck at zero, have risen 20% since January and trade near nine-year highs.
On Wednesday, the STOXX Europe 600 Banks index .SX7P was down 0.5% by 1510 GMT after a raft of bank earnings fed into analyst and investor concerns about the sustainability of the sector's profit growth.
Germany's Deutsche Bank DBKGn.DE bucked the general trend with a quarterly loss related to a previously flagged provision for a lawsuit linked to its troubled Postbank unit. But the surprise was it axing plans for another buyback and a rise in bad loan loss charges, sending its stock down 7%.
BNP Paribas's BNPP.PA revenue and profits exceeded analyst expectations thanks to a blow-out quarter for its equities traders - mirroring the equities boom among Wall Street banks - and a jump in revenue at its overall investment bank division.
The French lender's more than 11.2 billion euros ($12.2 billion) net profit target should be "well exceeded", said Tarik El Mejjad, an analyst at Bank of America.
BNP's shares wobbled, however, amid concerns about weakness at its retail unit, where net interest income (NII) - a closely watched measure of how much a bank earns from loans minus how much it pays on deposits - fell 11% before the European Central Bank has really got going with rate cuts.
Ratings agency Moody's expects the very strong net interest income numbers reported by Santander SAN.MC and UniCredit CRDI.MI "to have mostly peaked", said Olivier Panis, an associate managing director.
"Risk charges are rising at Deutsche and BNP. Although risk provisions are very low at UniCredit, we now expect them to increase in next quarters," while still remaining low, Panis added.
Rising profits and pledges of more than 120 billion euros in shareholder payouts have helped improve investor sentiment over the last year, yet most lenders still trade below their tangible book value - a sign of concern about profit sustainability, analysts say.
Santander, the second-largest euro zone bank by market value after BNP, reported a record net profit, up 20% year-on-year and in line with forecasts thanks to solid results in Spain and Brazil.
The bank's NII came in weaker than expected but it upped its profitability goals.
CEO Hector Grisi said the bank was trying to "carefully manage margins" in today's favourable environment of higher for longer European rates.
Italian lender UniCredit's profit topped forecasts as it announced it was buying a Belgian digital bank with its own cloud-based IT platform.
The bank, which has seen its shares soar 72% in 12 months thanks to CEO Andrea Orcel's decision to return nearly all profits to shareholders in buybacks and dividends, reported a small fall in quarterly revenues but stood by its 2024 profit goal. Its shares fell nearly 3% before recovering.
On Thursday, Britain's Lloyds Banking Group LLOY.L kicks off UK banks' earnings, while next week sees France's Societe Generale SOGN.PA and Credit Agricole CAGR.PA and Spain's BBVA BBVA.MC among the other big euro zone lenders give updates.
Investors will be watching closely for the NII outlook and how quickly lending margins are likely to come under pressure in the coming quarters.
INVESTMENT BANKING BOOST
For BNPP and Deutsche, a strong showing at their investment banking divisions helped offset weakness elsewhere.
Volatile investment bank earnings have long been a distraction for European banks and a source of displeasure for shareholders, but soaring advisory fees and a rebound in capital markets activities has helped diversify revenue streams in recent quarters.
The investment bank looks set to remain Deutsche Bank's biggest division by revenue in the coming years and last quarter was aided by a near doubling in advisory revenues. The bank, however, missed out on the jump in equities trading after exiting that business several years ago.
At BNPP, revenue from equities trading and prime brokerage services jumped 58%.
Still, the performance at both banks lagged their Wall Street peers, which saw an average 16% jump in investment bank revenues, according to Jefferies, against 12% at BNPP and 10% at Deutsche.
A strongly performing U.S. economy has sparked a wave of dealmaking and capital markets activity in the U.S., with volumes in Europe more subdued.
($1 = 0.9206 euros)
Profitability at European banks varies by country https://reut.rs/4bUzCPT
Reporting by Mathieu Rosemain in Paris, Tom Sims in Frankfurt, Valentina Za in Milan, Jesus Aguado in Madrid and Stefania Spezzati in London
Writing by Tommy Reggiori Wilkes; Editing by Elaine Hardcastle and Emelia Sithole-Matarise
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
