Investors worry about European bank earnings - and are right to

Big European banks will report their earnings for the first quarter next week, and some investors are afraid that bad results would bring a big deal of volatility to capital markets.

Some analysts have expressed their concerns about them, due to external risks such as economic growth, uncertainty about the US-China trade relationship, Brexit, and the turnaround in the monetary policy of the major central banks around the world.

Daniel Morris, senior investment strategist at BNP Paribas, said the results at the end of 2018 were near the low limit.

"They were one of the weakest for a long time, and that did not make a big impression because we were still recovering from the crash in December, and we had the Fed." Now, the Fed is in the past, and I think most of the situation between the US and China is already reflected in the prices, so this time the corporate season will have a huge weight, and if we have so thin margins against expectations, I think the markets will not be happy with that, "said Morris.

European banks have been suffering for years of weak profits, huge fines, ultra-low monetary policy, and uncertainty around the UK. US banks, on the other hand, particularly large, such as J.P. Morgan and City have very strong retail operations that make them resilient in times of economic difficulty. In the US, the results remain mixed for the moment, but we will still see what will happen on the Old Continent.

Credit Suisse

Credit Suisse will report on April 24, Wednesday

They expect net revenues of CHF 793.7 million, compared with 694 million in the same period last year. Last year, the Swiss lender returned to profit for the first time since 2014. The Bank reported a net profit for the year of 2.1 billion Swiss francs ($ 2.08 billion) in 2018, compared to a loss of 983 million. In 2017

Chief Executive Officer Tidjane Thiam leads the bank's strategy to improve balance by reducing bonuses and reducing staff numbers. In February, Thiam pointed out a number of external uncertainties that put the bank under strain. These include the US and Brexit trade talks, which led to "limited visibility" over the coming months.

However, the Bank's shares are still nearly 20% lower in the 12-month period and about 40% lower than Thiam's CEO in 2015.

UBS

UBS will report on April 25, Thursday

UBS is expected to report net profit for the first quarter of 856 million Swiss francs, compared with the 1.5 billion Swiss francs reported in the first quarter of 2018.

Last month, UBS chief Sergio Ermotti said that despite the rally in global stock markets, earnings in the first quarter of 2019 were one of the worst in recent years.

Noting the particularly harsh conditions outside the United States, Ermotti said investment banking revenues fell by about a third compared to the first-ever euphoria that began in 2018. Investment banking is a specific division of banking activity linked to the creation of capital for other companies, governments and other businesses.

The bank also recently announced that it cuts an additional $ 300 million in 2019 spending after expecting investment banking revenue to fall, and wealth management remained under pressure in the first quarter.

UBS shares are more than 23% down in the last calendar year.

Barclays

Barclays will also report on April 25, Thursday

According to data from Refinitiv, Barclays is expected to report net profit for the first quarter of £ 875.6 million, compared to the £ 764 million loss reported in the first quarter of 2018.

Earlier this year, Barclays reported a full annual net profit of £ 1.4 billion ($ 1.82 billion) in 2018, returning after losses in 2017. The bank also set aside Brexit's provision of £ 150 million 2018 years.

However, the bank remains under pressure from its shareholders in terms of its recovery strategy. In February, the American hedge fund Tiger Global Management dumped its entire stake in Barclays. The New York-based hedge fund is one of the ten largest investors in Barclays and holds a 2.5% share.

Barclays shares have lost more than 21% over the past 12 months.

Deutsche Bank

The German giant will report on Friday, April 26th

Expectations are net profit of EUR 130.5 million, compared with EUR 120 million in the same period in 2018.

Over the past few months Deutsche Bank has appeared regularly in the news due to speculation about a potential merger with Commerzbank. The merger is believed to be backed by the German government in an attempt to create a strong national champion. The joint operation may have a balance of nearly € 2 trillion.

Over the past few years, Deutsche Bank has been heading headlines for all the wrong reasons - from billing with the US Department of Justice to changes in governance, weak earnings, ongoing restructuring, and a sharp decline in stock prices. Last year, the bank reported its first net profit for the full year since 2014.

The shares of Deutsche and Commerzbank are more than 35% lower for the past year.

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