1. Research
  2. Products & Topics
  3. Periodicals
  4. Talking Point

European banks: Solid fundamentals

April 6, 2023
Region:
Recent wobbles in US and European banking markets have been triggered by idiosyncratic issues at some institutions and broader uncertainty about the impact of central banks’ monetary tightening. However, capital and liquidity levels of the banking industry in Europe continue to be very robust. In addition, asset quality and profitability are the strongest since the financial crisis 15 years ago. Nevertheless, the market tensions are likely to result in banks tightening lending conditions for the private sector further and they could fuel discussions about the effectiveness and potential adjustments of some regulations. [more]

More documents contained in "Talking Point"

190 Documents
January 4, 2024
Region:
2
The last 12 months have seen an impressive rebound of European banks which may have resulted in the industry’s most profitable year on record. Surging interest rates have played a major role, but resilient asset quality and a lower-than-feared impact of inflation on operating expenses have helped as well. A recovery in capital ratios – despite what probably have been the largest capital returns to shareholders since the financial crisis – rounds out a highly successful year. To pour a bit of water into the wine: business volumes were rather weak, in lending as well as in capital markets. Yet this is the flipside of the jump in rates and follows significant momentum over the previous years. Remarkably, the turmoil in the US and Swiss banking sectors in March has left no lasting scars. [more]
September 29, 2023
Region:
3
Once again, some see Germany as the “sick man of Europe”. This week, the 2023 ranking of the Global Innovation Index is released with Germany at rank 8, again. It does not only provide a good measure for innovation but also gives important insights into a country’s competitiveness. Indeed, there are numerous challenges especially with respect to digitalization and demographics. But Germany is also still a powerhouse in providing excellent R&D. [more]
September 28, 2023
Region:
4
The banking sector in Europe is benefiting from a set of conditions which have allowed for the strongest bottom-line result on record, even surpassing the pre-financial crisis peak of 2007. Rising interest rates have led to a surge in net interest income, asset quality remains sound and provisions therefore contained, and banks maintain tight cost discipline. Capital and liquidity levels continue to be robust, considerable returns to shareholders notwithstanding. European banks have also caught up with their US peers with regard to profitability ratios, for the first time in many years. Further gains in this benign environment may be harder to achieve though. [more]
August 1, 2023
Region:
6
Germany is a car-loving country. With a density of 578 cars per 1,000 inhabitants, more than one in two people in Germany owns a car (including children and the very elderly). The number of cars has risen steadily in recent years and shows that - despite the climate debate, congested inner cities and the supposedly car-critical Generation Z - there seems to be no car fatigue in Germany. [more]
July 6, 2023
Region:
Analyst:
7
To strengthen the EU’s strategic autonomy, its authorities are also pushing for a retail payment solution provided by European players. A market-backed project and a state-backed project have emerged. While the European Payments Initiative (EPI) will build on existing instant payment infrastructure and the wallet is supposed to go live early next year, the legal and technical foundations for the digital euro are still under development. As both solutions could easily cannibalize each other, better coordination would benefit Europe. [more]
June 23, 2023
Region:
8
The current development of the Rhine's water levels brings back memories of the previous year, when there were massive problems for Rhine navigation during summer. Since June, the level has fallen by a similar rate as last year or in 2018, which also saw a draught. Should the water levels approach or reach the lows of 2018 or 2022, this could impair the recovery of the German economy, which we already expect to be very modest. [more]
June 9, 2023
Region:
9
European banks are running at full steam, achieving the best start to a year since the financial crisis – the stress in March notwithstanding. Revenues have been buoyed by exceptional growth in interest income, while provisions for loan losses have fallen back again and costs remain in check. Capital and liquidity positions continue to be very robust, in spite of ample returns to shareholders and TLTRO repayments to the ECB. There are some clouds on the horizon though: interest rate increases are likely coming to an end and loan growth may slow further. [more]
June 7, 2023
Region:
10
Corporate lending is slowing substantially but this is primarily a normalization and due to subdued demand at least as much as it is due to supply conditions, i.e. banks’ tighter credit standards. At +8% yoy, credit expansion is still substantial. Only two industries are currently seeing a contraction. More worrying is the drying up of the corporate bond market where net issuance has collapsed since autumn. It is suffering from the double whammy of much higher interest rates and the disappearance of its dominant buyer of recent years, the ECB. [more]
37.5.0