Well provided for

27 April 2020 By Liam Proud Follow @liamwardproud

Shares in the region’s top lenders have plunged as investors fret about a surge in bad debts. Yet a Breakingviews calculator shows most capital buffers can absorb a spike three times as bad as the 2009 average. Taxpayer bailouts or widespread equity hikes are unnecessary for now.

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European banks including HSBC, UBS, Deutsche Bank and Barclays are due to publish first-quarter results in the week starting April 27.

Deutsche Bank on April 26 said its first-quarter earnings would be 66 million euros, higher than analysts had expected. However, the bank said it was possible its common equity Tier 1 capital would fall “modestly and temporarily” below its 12.5% target.

UniCredit said on April 22 that it expected provisions for bad debt to be between 1% and 1.2% of its average loan book in 2020, falling to between 0.7% and 0.9% in 2021.

UniCredit expects the euro zone’s GDP to contract by 13% in 2020, followed by a 10% expansion in 2021.

Sweden’s Handelsbanken said on April 22 that its credit losses for the first three months of 2020 were 538 million Swedish crowns, or 0.08% of total loans. That compared with a 0.05% ratio in the first quarter of 2019, and 0.04% in the final three months of the year.

Context News

European banks including HSBC, UBS, Deutsche Bank and Barclays are due to publish first-quarter results in the week starting April 27.

UniCredit said on April 22 that it expected provisions for bad debt to be between 1% and 1.2% of its average loan book in 2020, falling to between 0.7% and 0.9% in 2021.

UniCredit expects the euro zone’s GDP to contract by 13% in 2020, followed by a 10% expansion in 2021.

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