Major European banks’ third-quarter profits beat forecasts

Deutsche Bank, BNP Paribas and Santander surpassed third-quarter profit forecasts on October 28, while UBS boosted its share buyback to address investor concerns about the potential slowdown in bank profits. Standard Chartered expressed optimism, raising its income and profitability targets after exceeding profit expectations, driven by its wealth and global markets divisions.

European banks have been enjoying record profits since 2024, primarily due to higher interest rates and rising share prices. However, banking stocks experienced a 10% decline in September due to concerns over their exposure to euro-zone government debt and a weakening economic outlook. HSBC's weaker-than-expected performance on October 27 raised doubts, with some analysts citing increased competition for deposits and slowing interest income as indicators that banks' earnings gains from higher rates may be peaking.

On October 28, Deutsche gained 3.5%, Standard Chartered soared 4.6%, while UBS fell 1.7% and Santander dipped 3.4%. The Europe banks index remained flat, mirroring the broader market and reflecting the high standards set for banks to outperform. BNP Paribas credited a strong performance in equities trading, benefiting from volatile markets, for a 14% rise in profit to €3.46 billion (S$4.93 billion), alongside a €1.3 billion share buyback.

Deutsche reported a 2% increase in profit to €1.59 billion, exceeding expectations, as its retail and corporate banking divisions outperformed the investment bank's weakness. CEO Christian Sewing stated that the bank is meeting its 2026 objectives. The reaction to HSBC's results highlighted how strong performances by European banks have elevated investor expectations, even as the Iran war complicates the outlook for inflation and interest rates.

UBS, Switzerland's largest bank, reported a net profit of US$2.69 billion (S$3.45 billion) for the quarter, an 8% rise from the previous year and in line with expectations. UBS repurchased $1.8 billion of shares and aims to complete a $3 billion buyback program by February, ahead of its earlier target of mid-2027. Spain's Santander reported a 19% increase in underlying third-quarter net profit, driven by recently acquired lenders in Britain and the US, although weaker earnings in Brazil offset the gains.

Executive Chair Ana Botin emphasized that the bank's combination of global businesses and diversification across Europe and the Americas is a unique strength during volatile times.