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.

This content is for Subscribers only

Context News

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.

Email a friend

Please complete the form below.

Required fields *