European banks’ bumpy recovery a year after Credit Suisse collapse

By Jerry  Published On March 13, 2024
LONDON/FRANKFURT, March 13 (Reuters) – A year ago Credit Suisse was teetering on the brink of collapse, a scare that sent European bank shares tumbling and the cost of insuring against default soaring.
Investors were sounding the alarm about the stability of lenders amid turmoil among regional U.S. banks.
UBS’s (UBSG.S), opens new tab state-orchestrated rescue of the stricken Swiss peer restored calm. European banks have since staged a striking – if somewhat fragile – recovery, posting record profits and enjoying double-digit gains in their shares.

STOCKS SOAR

European bank stocks dropped sharply in March last year – Deutsche Bank shares were down more than a fifth for the month and the European banking index had its worst month since the pandemic.
Share prices have since rocketed, led by a 60% gain for UBS and nearly 70% for UniCredit (CRDI.MI), opens new tab. BNP Paribas (BNPP.PA), opens new tab and Deutsche Bank shares have underperformed but still gained.

INCOME BOOST

Fuelling the recovery has been the rebound in bank profitability, aided principally by higher interest rates that have swelled banks’ net interest income – the difference in the money banks pay on deposits and earn on loans.
Banks including Santander (SAN.MC), opens new tab, UniCredit and British banks like NatWest (NWG.L), opens new tab have all reported a jump in profits on the back of higher net interest income. Many have doled out huge dividends and buybacks.

Leave A Reply

Your email address will not be published. Required fields are marked *

*