By Elena Vardon
After Wall Street banks published their second-quarter figures in recent days, European investment banks will be closely watched to see if they mirror the strong performance of their U.S. counterparts as they publish their own prints in the weeks to come. Here is what you need to know:
WHAT TO WATCH:
--Investment banks are broadly anticipated to post solid revenue generation for the three months ended June 30, in line with their U.S. peers which reported strength in areas such as fixed income, currencies and commodities as well as equities and investment banking, with a strong performance in Asia. Volatility normalized in May and June after spiking in April, with trading recovery leading to a favorable operating environment for capital markets despite relatively muted activity on the primary side.
--Despite the positive trend, Citi analysts expect European wholesale banks to report slower trading revenue compared with their Wall Street peers due to differences in their business models and regional focus. This includes potential market share losses at Deutsche Bank, negative foreign exchange translation at Barclays due to a weaker dollar and some asset value writedowns for UBS.
--Expectations have been rising in recent months around the prospect of higher sustainable returns and there is little room for disappointment, Keefe, Bruyette & Woods analysts warned in a research report. "Unless 2Q25 propels a wave of earning upgrades--which seems unlikely given the global market slowdown--, buybacks positively surprise, or targets are raised, we believe the relative outperformance may hit pause, for now," they said. Buybacks are on the cards for Societe Generale and Deutsche Bank in the second half while Barclays is expected to announce a program alongside its second-quarter update.
--Commentary on the outlook on net interest income--or NII, the difference between what lenders earn on loans and pay out on clients' deposits--was mixed for U.S. banks but no significant change in messaging around this metric is expected from their European counterparts at this stage, J.P. Morgan said in a note to clients.
--"Management will likely maintain a relatively positive outlook and highlight various opportunities emerging--German stimulus, regulatory forbearance, corporates need for investments," KBW wrote. Analysts added that their only concern is the potentially slow start to client activity levels in the third quarter. They also expect some focus on new bank capital rules given recent Pillar 3 disclosures and potential mitigation of upcoming regulations, KBW said.
SCHEDULE:
-Deutsche Bank: July 24
-BNP Paribas: July 24
-Barclays: July 29
-UBS: July 30
-HSBC: July 30
-Societe Generale: July 31
Write to Elena Vardon at elena.vardon@wsj.com
(END) Dow Jones Newswires
July 21, 2025 08:08 ET (12:08 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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