Rising Interest Rates Boost Q3 Results for Santander, Deutsche Bank, and UniCredit
By Scott Kanowsky
Investing.com -- Three of the Eurozone's biggest lenders reported a jump in earnings in the third quarter, as a recent inflation-driven rise in interest rates lifted results in the face of looming economic headwinds.
In Spain, Banco Santander (BME:SAN) 11% growth in attributable profit to 2.4 billion euros, above consensus estimates.
The uptick in borrowing costs helped offset an increase in loan-loss provisions, which the currency bloc's biggest bank said stemmed from fears that surging price growth would weigh on business activity and consumer spending. Operating costs also moved up by 14%.
Shares in Santander slipped by more than 2% in early afternoon trading. Analysts at Morgan Stanley suggested that investors may be aiming to take profits after strong performance by the stock heading into its latest results.
Meanwhile, adjusted pre-tax income at Santander's German peer Deutsche Bank (ETR:DBKGn) expanded by 19% year-on-year to 1.6 billion euros, beating expectations and touching its highest mark since 2006.
All four of its divisions saw revenue growth. The bank's key investment banking division was a standout performer thanks in part to a spike in currency dealmaking and solid fixed income trading spurred on by the higher interest rates.
But provisions for bad loans came in at 350 million euros, up from 117 million euros in the corresponding quarter last year, as the group warned of "more challenging macroeconomic forecasts." Shares in Deutsche Bank edged into the red.
Elsewhere, UniCredit (BIT:CRDI) predicted that net earnings this year would top 4.8 billion euros, crediting a "favorable interest rate environment" and cost controls.
Analysts at Morgan Stanley said the announcement marks a "significant" improvement to the Italian lender's outlook.
The bank also reported underlying net profit in the third quarter of 1.7 billion euros, ahead of consensus estimates of just over 1 billion euros, as elevated rates and lower-than-expected provisions overcame the impact of market volatility on fees.
UniCredit shares popped on Wednesday.
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