11th consecutive quarterly result
- with European banks beating analysts' consensus.
- 80% of banks delivered net results in line with or above consensus.
Earnings momentum still positive
- FY24e pre-provision profits upgraded by 2%-3% on an aggregate level post results
- 2023e net income growth of c. 40% vs. 2022
- Index aggregate ROE close to 12% for 2023e (vs. last decade peak of 8%
Contrasts are starting to emerge
- NII in the Euro area was up c. 5% Q/Q driven by peripheral banks. However, UK banks missed due to intensifying deposit migration and mortgage competition
- Capital generation remains strong (+5-10bp), with Commerzbank and Deutsche Bank increasing capital returns as soon as Q3 (normally an interim/full year event)
- Costs in line and provisions slightly below expectations
Valuation
European banks have derated further as investors remain concerned with the credit cycle, competition for deposits, interest rates volatility and political interference