Mixed results for Europe’s banks and their first half-year earnings

A slew of European banks reported first half 2024 and Q2 2024 earnings on Wednesday with Deutsche Bank, BNP, Banco Santander, Lloyds and Unicredit among the biggest names updating investors.

Deutsche Bank

Deutsche Bank reported a moderately robust operating performance in the first half of the year, with profit before tax coming in at €2.4bn, or €3.8bn, excluding the Postbank takeover litigation provision. In comparison, profit before tax in H1 2023 was €3.3bn. 

The bank had already signalled earlier that the Postbank provision would impact profit numbers this quarter, while also announcing that it would not do another share buyback this year. 

Net revenues for H1 2024 inched up 2% to €15.4bn, whereas adjusted costs decreased 2% to €10.1bn. In Q2 2024, profit before tax, excluding the Postbank provision was €1.7 bn, a step up from  €1.4bn in Q2 2023. Adjusted costs in Q2 2024 inched up 2% from the prior year quarter, to €5bn. 

Christian Sewing, chief executive officer (CEO) of Deutsche Bank said: “These results reflect Deutsche Bank’s operating strength. In the first half of the year, our underlying profitability was the highest since 2011, which demonstrates the success of our strategic execution.

“We have built powerful momentum in our client franchise across all our businesses – and this, together with our very solid capital ratio and continued cost and risk discipline, keeps us well on track towards meeting our 2025 goals and our distribution commitments to shareholders.”

BNP Paribas

BNP Paribas reported better earnings than expected for Q2 2024, seeing strong results in key branches such as equity trading and prime brokerage services.  However, the bank still reported weakness in its retail business, due to a plunge in net interest income, especially in Italy and France. 

Revenues for the second quarter of the year inched up 3.9% from Q2 2023 to €12,270m. This was mainly driven by the corporate and institutional banking (CIB) division seeing a 12.1% surge in Q2 2024, with global markets also seeing a 17.6% jump. 

Commercial and personal banking fees also increased 7.4%, with the asset management division growing 9.8% and Insurance edging up 5.2%. 

Gross operating income inched up 3.4% to €5,094m in Q2 2024, with the net income group share coming in at €3,395m. Earnings per share jumped 8.1% from the prior year quarter to €2.81.

Jean-Laurent Bonnafé, CEO of BNP, said at the end of the bank’s board meeting on Tuesday: “On the strength of its diversified and integrated model, the group performed very well in the second quarter 2024 thanks to the business momentum of its operating divisions. 

“In the second half of 2024, we will also continue to implement operating efficiency measures, and maintain our disciplined management of cost of risk through the cycle. BNP Paribas is well placed in the new phase of the economic cycle and accordingly confirms its 2024 trajectory.”  

Banco Santander

Banco Santander also reported its first half 2024 earnings on Wednesday and recorded attributable profit of €6,05m, a surge of 16% from H1 2023. 

This was mainly driven by all the bank’s global regions and businesses seeing robust growth in net interest income, as well as the number of customers increasing by four million. Santander also had good cost control in the first half of the year. 

Revenues jumped 10% to a record of €31.05bn, while return on tangible equity (RoTE) came up to 15.9%. 

Earnings per share also grew 19%. Santander announced new financial targets for the year with revenue growth now expected to be in the high single-digits, and RoTE likely to be more than 16%. Efficiency is also expected to be about 42%. 

Ana Botin, President of Banco Santander said, in the earnings press release: “Revenues grew 10% in the first half, supported by the five global businesses, and costs remained almost flat for four consecutive quarters, while earnings per share increased 19%. 

“These results demonstrate that we are growing sustainably and profitably thanks to our scale, diversification and the execution of our transformation.”

Santander UK

Coming to Santander UK, the bank saw profits plunge by more than 31% in the first half of the year, to £804m (€955.34m), from £1,173m in H1 2023. This was mainly due to decreased mortgage lending, as clients held off on buying new properties, with interest rates still being high. Similarly, increased savings rates also hit the bank’s profits. 

As a result, net interest income also fell 11% in H1 2024, with operating expenses increasing 5% after rising investments in customer experience and efficiency and climbing inflation. 

However, with the economic outlook for the coming few months becoming more optimistic, credit impairment charges plummeted 43%, with the cost of risk also decreasing to 8 basis points, from 14 basis points in the first half of 2023. 

Mike Regnier, the CEO of Santander UK said, in the earnings report, “Our first half financial results were in line with our expectations, with a more positive trajectory reflecting improvements in the second quarter. We remain focused on supporting our customers and delivering products and services that help them make the most of their money. 

“Our expanded digital offer- including OneApp, our new mobile banking app which has new functionality for an improved customer experience- is making it easier to use our services. Looking ahead, we remain well-positioned to support our retail and business customers as they benefit from the fall in inflation and improving economic picture.” 

UniCredit

Italian banking giant UniCredit also released its second quarter and first half results on Wednesday. The bank saw its Q2 2024 net profit increase 5% from the Q1 2024 to €2.7bn. This was above the €2.4bn expected by the market and was also up 16% from Q2 2023. Not only that, it was the fourteenth quarter in a row that the bank has seen growth. 

Net revenue for the second quarter came up to €6.3bn, which was 6% more than Q2 2023. Operational costs in Q2 2024 were €2.3bn, down 1.7% from the second quarter of 2023. 

The bank upped its revenue guidance for the financial year 2024, to €23bn, while also upgrading its organic capital generation guidance to more than 350 basis points. It reiterated its net profit guidance at more than €8.5bn. 

Andrew Orcel, CEO of UniCredit, said in its earnings press release: “For the first half and second quarter of this year, UniCredit posted yet another record set of financial results. They are all the outcome of our continued transformation and focus on prioritising sustainable quality profitable growth while driving operational and capital excellence and investing for the long term. 

“Fees strongly grew across the board as our product factory and first line investments begin to deliver more visible results. They complemented well a resilient interest income, far exceeding our cost of equity, to deliver high quality profitable revenue growth.”