European banking: set to shrug off slow revenue growth

Sep 13 13:09 2017 Print This Article

European banks have frequently been in the headlines of the financial media this year. We have seen bank bailouts in Italy, mergers and acquisitions in Spain, large volumes of primary bank issuance as governments sold their stakes and the sector has remained a proxy for market sentiment on future European Central Bank (ECB) rate policy.

The wider European financial sector outperformed the MSCI Europe ex-UK index by 4% in 2017 through the first week in August, but has underperformed the index over the last few weeks.

In my view, the main reason for this recent underperformance is the sluggish state of European banks’ revenue lines. The European banks second quarter reporting season, which came into full swing in mid-August, was once again nominally strong. This followed five quarters of gradual improvements delivering better than-expected bottom-line income, contributing to stronger capital positions.

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BNP Paribas Investment Partners is the asset management arm of BNP Paribas, one of the largest and best-rated banks in the world. They are a global investment solutions provider, offering investors high-quality investment products and services for both mainstream established asset classes, thematic investing and specific regional financial assets in developed and emerging markets across the globe. The aim of this blog is to provide a forum for investment professionals from across the spectrum of BNP Paribas Investment Partners’ teams to share their analyses or wrestle with the strategic themes and issues confronting us as asset managers.

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