European banks in the clear after the accounts, Ubs runs and Deutshce Bank slips

(Il Sole 24 Ore Radiocor) - Quarterly results session in Europe, with banks in the spotlight after the accounts. In Zurich runs Ubs Group Ag after its quarterly report with a profit well above expectations, while in Frankfurt Deutsche Bank is black jersey on the Dax despite better-than-expected earnings but with the market looking at forecasts. In Madrid, the Banco Santander saw profit rise as higher revenues and cost-cutting helped offset higher provisions, partly related to claims in the UK auto sector.

Switzerland's Ubs posted sharply higher net profit in the first quarter (over $3bn), benefiting from solid performance from its investment banking and wealth management divisions, and also said it was on track to meet its 2026 targets as it nears the completion of its Credit Suisse integration later this year. The bank is also trying to mitigate the impact of Switzerland's plans to reform banking regulation. The Swiss bank said client activity remains solid in the second quarter, with markets resilient overall thanks to expectations of a lasting diplomatic solution to the Middle East conflict, but warned that conditions could change quickly. "Ubs' outlook appears positive," say Kbw analysts, "We expect upward revisions to earnings estimates.

Deutsche Bank's results also exceeded expectations, but leave investors sceptical: net profit exceeded expectations in the quarter, but investment banking revenues slowed and signs of caution for the future (starting with increased provisions) cooled enthusiasm, penalising the share price. For Citi analysts, the results are 'mixed' and 'the weaker capital and unchanged outlook could weigh on the stock'. Although guidance on an overall payout ratio of around 60 per cent has been reiterated, they add, 'we are concerned that this may limit the possibility of further buyback increases during the year'.

Finally, enthusiasm has also dampened for Santander: while the bank achieved a record net profit of EUR 3.56bn in the quarter, up 12%, above expectations, the market views with concern the UK division's numbers, which saw pre-tax profit fall 44% after accounting for a provision of GBP 179m related to the Financial Conduct Authority's consumer redress programme on car loans.