Eurozone banks have just completely dispelled fears caused by the first major banking earthquake in more than a decade, with epicenters in California and Switzerland. Their half-yearly results that have just been presented and the recent stress test of the European Banking Authority (EBA), which were easily passed, distance them from the crisis of confidence unleashed by Silicon Valley Bank and Credit just four months ago. Uncertainty reappears with the new cycle of interest rate hikes: the risk of an economic slowdown and the foreseeable increase in delinquencies.
Apart from Deutsche Bank, which earned 7% less in the first half, the main European banks have increased profits strongly. The largest in the euro zone by business volume, BNP Paribas, has earned 7,245 million, 46% more than a year earlier, while the Italian Unicredit has almost doubled its earnings, up to 5,934 million. The French entity Société Générale has left behind the losses of 236 million a year earlier, while the second most important German bank, Commerzbank, has won 950 million, 64% more. Credit Agricole obtained a profit of 2,481 million, 9% more.
Of all these figures and percentages, the determining factor is that a good part of the entities have exceeded analysts' forecasts during the semester, which reconciles them with the markets that punished them harshly in March. BNP, BBVA or Deutsche Bank are taking advantage to buy back shares, which is an indirect way of improving shareholder remuneration.
Spanish banks have also participated in this profit celebration. The six listed companies, which are Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja, have accumulated profits of 5,373 million during the semester, an increase of 49%, despite raising provisions in some cases. The dreaded delinquency has not yet made an appearance and the banks say they have plenty of liquidity, despite having returned to the ECB a good part of the special loans from the pandemic. They don't seem to be in too much of a rush to raise deposits.
The uncertainty now points to the effects of interest rate hikes on the economy. The credit rating agencies Moody's and S
"This euphoria for current and future results must be treated with great caution, as it will be subject to the evolution of macro and even national events in the coming months," says José Luis Cortina, president of the Neovantas consultancy.
In the latest ABE stress tests, which are published every two years, Spanish, Irish and Dutch banks fare better than German banks. In the worst-case scenario, the 111 euro zone entities analyzed would reduce their high-quality capital from 15% to 10%, a percentage similar to two years ago. However, the European authority warns that the banks themselves expect a worsening of this ratio from now on.
