Europe's banks under investor pressure to keep earnings growth alive
European banks report Q3 earnings this week and next
Focus on fading interest rate boost, cost controls
UniCredit move stirs M&A chatter
By Sinead Cruise
LONDON, Oct 21 (Reuters) -Europe's biggest banks are healthier than at any point since the 2008-09 financial crisis, but investors want reassurance that they can trust their longer term earnings power as interest rates fall.
Bank share prices .SX7P have broadly delivered a double-digit rise this year, driven by stock buyback programmes made possible by years of capital accumulation, restructuring, cost cuts and supportive central bank policy, which boosted their profits.
Deutsche Bank DBKGn.DE, Lloyds LLOY.L and Barclays BARC.L will kick off third-quarter earnings reporting this week, while UBS UBSG.S and HSBC HSBA.L will be among those reporting next week.
The numbers are expected to show continued profitability, with robust investment banking activity offsetting squeezes on margins and weak demand for loans among consumers and businesses.
But investors want more. Besides looking for evidence of asset quality resilience, they are seeking sharper strategy, lower costs and the potential to outperform in a low growth global economy.
Deal-making has captured the imagination of bank boards in the last three months. BNP Paribas BNPP.PA bought AXA Investment Managers AXAF.PA and UniCredit CRDI.MI raised its stake in Germany's Commerzbank CBKG.DE, stirring chatter on cross-border consolidation.
"Estimates suggest that up to 600 billion euros ($652 billion) in net interest income could be at risk in the first half of 2025 if the European Central Bank cuts rates as expected," Filippo Maria Alloatti, Head of Financials for Credit at Federated Hermes, told Reuters.
"Management teams are proactively taking measures ... exploring bolt-on acquisitions in asset management, wealth management and even niche fintech opportunities," he said.
Britain's NatWest NWG.L swooped on Metro Bank's MTRO.L residential mortgage book while media reports suggest HSBC's HSBA.L new CEO Georges Elhedery may make a much bigger mark on the lender's structure than previously thought.
Sales by governments of their crisis-era stakes in banks remove one hurdle to deal-making, credit rating firm Scope Ratings believes, although others remain.
"ESCAPE VELOCITY"
Analysts at McKinsey said executives needed to attain "escape velocity" to distinguish themselves from peers and increase appeal to investors.
To maintain the current return on tangible equity margins, banks will need to cut costs 2.5 times as fast as revenues decline, McKinsey said in its Global Banking Annual Review 2024.
Just 14% of global banks have a price-to-book ratio above 1 and a price-to-earnings ratio of more than 13 - more than four times lower than companies in all other industries, McKinsey said.
Philippe Bodereau, head of credit research at PIMCO, said Europe's banks were separating into two camps; those with potential to mirror U.S. peers with consistent, double-digit returns on equity, and those stuck at depressed single-digit levels.
"I think those institutions should be doing a fair bit of strategic soul searching," he said.
INVESTMENT BANKING BOOST
UBS UBSG.S and Barclays BARC.L are expected to report a third quarter bounce in investment banking revenues, particularly in equities and advisory fees, where U.S. rivals JP Morgan JPM.N, Morgan Stanley MS.N and Goldman Sachs GS.N outshone expectations.
Like U.S. peers, European banks are not expected to show a marked deterioration in asset quality, and fears have waned that commercial real estate (CRE) could dent capital, ratings agency Moody's said.
A stress test of the 21 European lenders with the highest CRE exposure relative to Common Equity Tier 1 (CET1) capital showed all would remain above minimum CET1 capital thresholds, even under a scenario of severe loan quality shock.
Analysts at HSBC remain on guard for negative surprises in net interest income, a measure of profitability that reflects the difference between what a bank earns on loans and how much it pays depositors.
HSBC prefers asset gathering stocks like Credit Agricole CAGR.PA and KBC KBC.BR over BNP Paribas BNPP.PA and ING ING.AS, where net interest income (NII) momentum was seen weakest.
UK domestic lenders Lloyds and NatWest NWG.L should report continued third quarter growth in NII, Barclays analysts said, boosted by an improving outlook for loan growth, particularly mortgages.
Concerns about a possible rise in bank taxation in the UK Budget on Oct. 30 is weighing on sentiment.
But shares in domestically-focused lenders could bounce by more than 5% if the government opts to leave current arrangements intact, UBS said.
($1 = 0.9214 euros)
European banks outperform https://reut.rs/48ipHUo
Government stakes in Europe's banks https://reut.rs/3YCizz3
Reporting By Sinead Cruise
Additional reporting by Tommy Reggiori Wilkes, Dhara Ranasinghe and Elisa Martinuzzi; Graphics by Tom Sims; editing by Barbara Lewis
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
