LIVE MARKETS-European banks: a resilient earnings season

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EUROPEAN BANKS: A RESILIENT EARNINGS SEASON

One of the key takeaways of this earnings season in Europe is the resilience of bank earnings which have offered shelter in a landscape otherwise dominated by tariff uncertainty.

The latest example came this morning from UniCredit.

Italy's second-biggest bank lifted its 2025 outlook after posting a surprise increase in quarterly profit, sending its shares up around 4% to 14-year highs and helping the sector cement its position as the best performing this year.

"Despite the tariff uncertainty, European banks are confidently affirming their full-year guidance – in some cases they have even raised some of their projected numbers. This has been a key difference between financials and corporates in the latest earnings season," writes Jakub Lichwa, portfolio manager at Twenty Four Asset Management in London.

According to Lichwa, heightened volatility is boosting trading, benefiting their equities and FICC divisions, and fewer clients are shifting to higher-interest term deposits compared to late 2023 and early 2024, despite rates trending lower .

Lichwa concludes that while banks are not insulated from the broader economic trends, "this latest earnings season is further evidence of the resilience of the sector."

The STOXX Europe Banks .SX7P index is up 28% YTD, while the STOXX 600 .STOXX has gained 7% so far.

(Danilo Masoni)

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