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Europe

EU integration greatly influences policy-making at the national level, and the EU itself is a major actor on the world economic stage. Most of the conditions governing the economic and business environment for European companies and consumers - especially in respect of the financial markets - are decided at the European level. For this reason, Deutsche Bank Research analyses and appraises the latest developments in the EU and EMU. European banks and financial markets are a major focus in this regard.

222 (21-30)
    
July 26, 2022

European bank performance in inflation times

Region:
Europe
Talking Point
Topic:
Banking and financial markets
Analyst:
Jan Schildbach
Rising interest rates due to rampant inflation will have a mixed impact on the banking industry. They are a boon for net interest income but also cool down loan demand (currently still buoyant) and may lead to higher loan losses. This will probably be reinforced by a mild recession in Europe caused by macroeconomic and geopolitical headwinds. As a result, net income may decline yet banks should remain solidly profitable. From a comfortable starting position, capital ratios could come under pressure if risk-weighted assets continue to rise which would dampen prospects for further significant shareholder returns through dividends and share buybacks. Liquidity levels have stayed strong so far. [more]
21
April 29, 2022

European banks: On robust footing in turbulent times

Region:
Europe
Talking Point
Topic:
Banking and financial markets
Analyst:
Jan Schildbach
Like the real economy, the European banking sector is facing headwinds due to Russia’s war in Ukraine. Nevertheless, balance sheets and profitability are strong; indeed, 2021 was banks’ most successful year since the financial crisis and capital ratios are at record highs. And while loan loss provisions may now rise from unusually low levels, net interest income should also benefit considerably from higher interest rates as central banks combat surging inflation. However, both geopolitical and macroeconomic policy uncertainty remain remarkably high. [more]
22
March 25, 2022

Stablecoins: DeFi, Libra and beyond

Region:
Europe
EU Monitor
Topic:
Banking and financial markets
Analyst:
Heike Mai
In 2021, stablecoins’ market capitalization increased multifold to USD 170 bn. More importantly, they are the most traded coins in the entire crypto space and crucial for decentralized finance (DeFi). In the future, stablecoins could also gain traction in the real world – adding to the competition in the fields of retail and corporate payments. Stablecoins differ considerably in their price stabilization mechanisms and can pose risks, which have come into the spotlight of regulators. [more]
23
December 17, 2021

European bank performance: Do it again, like in 2009 (and 2010)!

Region:
Europe
Talking Point
Topic:
Banking and financial markets
Analyst:
Jan Schildbach
The rebound of Europe’s banking sector from last year’s slump in some ways resembles the recovery following the financial crisis. Just the drivers are different. While in 2009 the main improvement came from much lower writedowns on securities portfolios, in 2021 it was much lower loan loss provisions than in the prior year. In both cases, benign capital markets provided an additional tailwind for investment banking franchises. The industry’s capital and liquidity levels remain high. Maintaining this momentum in 2022 will be more difficult as the low-hanging fruit has been picked. But it may still be possible, given past experience and confidence that the macro economy will continue to gain strength once the pandemic (and supply constraints in manufacturing) has subsided. [more]
25
December 15, 2021

Payment choices in Europe in 2020: Convergence at the till, reinforcement of national differences at the online checkout

Region:
Europe
EU Monitor
Topic:
Banking and financial markets
Analyst:
Heike Mai
Over 101 billion non-cash payments were made in the euro area in 2020, a meagre increase of 3.7%, which mainly reflects a slump in growth of card payments. However, depending on the country and on the payment situation, there were different trends during the pandemic. At the till, payment habits are converging towards card use. In online shopping, national differences (card or e-payment solution) seem to become more pronounced. [more]
26
December 8, 2021

Video: EU Transport and Airlines Outlook 2022

Region:
Europe
dbInSights - public
Analyst:
Andy Chu
In Freight, Logistics and Container Shipping, we think 2022 will be a record year for earnings and FCF. With corporate balance sheets in good shape we see scope for significant shareholder returns we expect freight demand to be led by an inventory re-build and not the consumer. In Airlines & Airports, the latest travel restrictions will clearly mean some lost revenues and the return of booking hesitancy this winter. Medium-term, however, expectations are unlikely to have to change given pent-up demand for travel and the restructuring that’s been done, supporting valuations. [more]
27
November 1, 2021

Looking beyond the pandemic: Strong comeback of European banks

Region:
Europe
Talking Point
Topic:
Banking and financial markets
Analyst:
Jan Schildbach
On face value, the European banking industry has recovered well from the coronavirus shock. Revenues, loan loss provisions and profits are largely back at their pre-crisis level, as is corporate loan growth. Below the surface, some shifts remain – interest income continues to suffer, but fees and commissions and trading income outperform. Funding from the ECB and even more so liquidity held at the central bank move from one record to the next, similarly to capital and liquidity ratios. The gap to US banks has widened further. EU implementation of the final Basel III rules has now reached decision stage, already causing concern about future European competitiveness. [more]
28
July 12, 2021

The digital euro: Political ambitions and economic realities

Region:
Europe
EU Monitor
Topic:
Banking and financial markets, Digital
Analyst:
Heike Mai
The introduction of a digital euro is drawing closer: as a digital version of cash it is primarily intended to be a means of payment rather than an instrument for investment. The ECB wants to strengthen Europe’s sovereignty in the world of payments as well as the euro’s competitive position vis-à-vis other currencies. However, this will only be achieved if the digital euro is used widely, which is not very likely. A limit is expected on how much users can hold, to prevent a massive outflow of bank deposits into digital central bank money. In this case, lending decisions and money creation would eventually shift to the ECB. Europe would face the question which type of monetary and financial system it wants. [more]
29
May 28, 2021

Crisis? What crisis? European banks rebound (again)

Region:
Europe
Talking Point
Topic:
Banking and financial markets
Analyst:
Jan Schildbach
The recovery was quick and resounding. The banking sector in Europe has shaken off the impact of the pandemic and in many ways it looks like nothing happened in the past two years at all. In Q1 2021, profitability, costs, efficiency levels, several capital and liquidity indicators were all similar to Q1 2019. Nevertheless, the crisis has left its imprint: balance sheets are far larger, revenues and loan loss provisions are substantially higher, as is the CET1 ratio. Hence, there is still room for further normalisation. [more]
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