|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||6.33 - 6.56|
|52 Week Range||3.09 - 7.33|
|Beta (5Y Monthly)||2.00|
|PE Ratio (TTM)||8.26|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 23, 2019|
|1y Target Est||4.13|
(Bloomberg Opinion) -- European bank bosses are on the front foot again. During the brutal first half of 2020, some lenders posted losses amid soaring provisions for bad loans. Now they’ve been emboldened by a third-quarter profit rebound. Most of the region’s bankers are sounding confident that the worst of the pandemic pain is behind them, despite the new wave of lockdowns. A dose of caution is warranted.Keen as they are to persuade regulators that they’re fit enough to resume dividends and boost trader rewards, Europe’s banks might be underplaying the potential impact of the economic contraction and an ongoing squeeze on profit margins. For a more sobering assessment of the industry, look at Germany’s Commerzbank AG, which has less exposure to the booming trading business than its rivals and expects to lose money this year. The German lender’s gloom is in marked contrast to its peers, including Italy’s Intesa Sanpaolo SpA and UniCredit SpA. Intesa is sticking with its profit target for 2021, and sees net income of at least 5 billion euros ($5.9 billion) in 2022, about a quarter more than analysts are forecasting. Similarly, UniCredit reiterated its objective for a profit of at least 3 billion euros next year after reporting third-quarter income that beat estimates. The bank is on course to earn closer to 800 million euros this year.Such certainty on how 2021 may play out is questionable. Banks have benefited from a surge in trading revenue this year — even France’s Societe Generale SA, which is scaling back its securities unit, improved both debt trading and equities revenue in the third quarter. But who knows whether market conditions will remain as favorably volatile? If the bumper trading profits ease off next year, banks will be more exposed to a decline in lending income. UniCredit saw revenue drop 7.8% in the first nine months of the year, even with the trading bonanza. It’s betting that it can repeat 9.5 billion euros of net interest income next year, driven largely by loan growth as economies recover.But no one knows how deep a scar the new lockdowns will leave. The euro area is headed for a double-dip recession in the fourth quarter, according to Bloomberg Economics.Key to European bankers’ optimism is that — after they set aside more than $69 billion in the first half of the year — the bulk of the bad-loan provisions are behind them. In this crisis, under new accounting rules, banks have had to take this action sooner for loans that may sour. But there are still valid doubts about the pandemic-ravaged economy overt the next few months.UniCredit’s chief executive officer, Jean Pierre Mustier, says things are looking better on non-performing loans, but he acknowledges that government-backed payment moratoria are only just expiring. That makes it difficult to draw conclusions about which customers will resume payments.Commerzbank is blunter still: “The rapidly evolving nature of the coronavirus pandemic means that the form and impact of the response measures” will need “to be monitored very closely over the coming days and weeks.” It suggests loan provisions might be higher than the 1.5 billion euros it’s targeting for 2020.Maybe Commerzbank, in the midst of a messy management change, has been lending to the wrong customers, making it more of a unique case. But the European Central Bank’s “severe but plausible scenario” estimates that non-performing loans at euro zone banks could reach 1.4 trillion euros this time around, far outstripping the region’s previous crises.The ECB will have this in mind as lenders try to convince it to allow the restart of shareholder payouts next month. Banker optimism only gets you so far.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Societe Generale SA and UniCredit SpA closed out a bumper quarter for European investment banks that fueled calls for a resumption of dividends and buybacks, even as regulators and some rivals warned of the impact of the pandemic’s second wave.SocGen rebounded from its worst loss in 12 years with a third-quarter profit that was almost double analyst estimates, helped by improved trading revenue and lower provisions for bad loans. It was a pattern that held true for most of its peers, including Italy’s UniCredit SpA, which also posted better-than-expected earnings on Thursday.Both have been among a growing group of banks pushing for a resumption of dividends, pointing to the relative calm over the summer months and the strength of their trading units. But in an acknowledgment that the fallout from the pandemic for banks is far from over, Germany’s Commerzbank AG warned bad loans could quickly rise as Europe enters new lockdowns and relief measures run out.“We are still in a stage where we definitely don’t really know what’s going to happen,” Commerzbank Chief Financial Officer Bettina Orlopp said in an interview. “We will closely monitor over the next couple of weeks and months” how the outlook for bad loans evolves.The warning came as Germany reported record new infections and England joined other European countries in entering a new, four-week lockdown. European banking regulators, who had been moving closer to lifting a de-facto dividend ban, are increasingly worried about the worsening economic outlook.Investors punished Commerzbank, sending its shares down by the most in almost five months, while SocGen rallied as much as 6.5% and UniCredit gained as much as 2%. SocGen and other French lenders were among the worst-hit this year when the onset of the pandemic prompted dividend suspensions.The third-quarter rebound is relieving pressure on Chief Executive Officer Frederic Oudea after a string of trading hits. Both equities and fixed income trading did better than expected, though the increase fell short of the gains at some rivals. Debt trading rose about 9% from a year earlier, compared with a 36% increase at BNP Paribas SA and a 25% jump across Wall Street. Equities trading revenue gained 5%, versus 15% at U.S. firms.At UniCredit, CEO Jean Pierre Mustier raised his guidance for underlying profit this year and said he expects to distribute 50% of that with a mix of dividends and share buybacks starting in 2021 if regulators approve. Trading revenue rose about 10% from a year earlier.But lenders that jettisoned their trading operations after the financial crisis had little to cheer last quarter, as the pandemic adds to already severe headwinds from negative interest rates. Profit and revenue at Commerzbank both came in below expectations as income from lending declined.That was also the case at ING Groep NV, where profit missed estimates even as the Dutch lender set aside less money for bad loans. ING will cut 1,000 jobs by the end of 2021 and close all of its offices in South America and some in Asia amid the economic fallout from coronavirus.Shares of ING slumped as much as 7.3%, the most since September.Both ING and Commerzbank went through a management reshuffle this year, with the Dutch firm losing former CEO Ralph Hamers to UBS Group AG and Commerzbank CEO Martin Zielke stepping down under pressure from investors. Oudea and Mustier, by contrast, are among the longest-serving bank CEOs in Europe.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Chancellor Angela Merkel is pushing for a partial lockdown in Germany that would include closing bars, restaurants and leisure facilities through the end of November, as coronavirus infections continue to surge across Europe.Merkel is also urging citizens to keep social contacts to an absolute minimum and avoid all non-essential private travel, according to a draft federal government briefing paper obtained by Bloomberg.Germany will help companies affected by the toughest restrictions since the end of the spring lockdown by making up to 10 billion euros ($11.7 billion) in aid available in November, when the measures will be in place, according to a person familiar with the matter.The chancellor, who has struggled to forge a national consensus in recent weeks, will seek an agreement with regional premiers on Wednesday in Berlin. The meeting, which is under way, was expected to be contentious, with some state leaders signaling opposition to the measures.Like many of her European counterparts, Merkel’s hand has been forced by a spike in virus cases that has been gathering pace since the start of August, fueled by travelers and people failing to observe hygiene and distancing rules. French President Emmanuel Macron is also set to announce tighter restrictions when he addresses the nation on Wednesday evening.Merkel has pledged to do all she can to avoid imposing another lockdown as strict as the one that hammered Europe’s biggest economy in the second quarter.The latest steps -- which would take effect on Monday -- are designed to stem the spread of the disease while broadly allowing activity to continue. They’re likely to provoke protests from industry groups and from citizens already weary of what they see as government intrusion into their private lives.Bloomberg Economics estimated that the impact of the measures will likely be much lower than the April lockdown, but still depress German output by about 0.6 percentage points in the fourth quarter.What Our Economists Say“Germany won plaudits for its handling of the first wave of the pandemic. The question now is whether the fresh restrictions will do enough to halt the spread. The risk, of course, is that the number of infections continues to climb and results in further economic damage”\-- Jamie Rush and Maeva Cousin, Bloomberg Economics. Read the full INSIGHT here.Germany’s benchmark DAX Index fell as much as 4.2% and the Stoxx Europe 600 Index sank 3%, with auto and construction shares seeing the steepest declines. Haven assets, such as Treasuries and the yen, rose.While most economists and investors still think the European Central Bank will wait until December to expand its bond-buying program, news of tighter curbs put them increasingly on guard for surprise action as early as Thursday.Some states may refuse to back all of Merkel’s proposals, and they have already prompted a vice president of the lower house of parliament to declare that he won’t follow the new rules.“I urgently warn against alarmism, which can also lead to erroneous decisions,” Wolfgang Kubicki, a Bundestag vice president from the opposition Free Democrats, said on Deutschlandfunk radio.The government briefing document notes that effective contact tracing has become impossible in many parts of Germany. Without further restrictions, exponential growth in the number of infections would overburden the health system within a few weeks and lead to a significant rise in serious cases and deaths, according to the proposal.Merkel’s government is also planning to extend and enhance assistance for sectors especially hard hit by the restrictions, such as hotels, restaurants, travel agencies and event management, Economy Minister Peter Altmaier told lawmakers. Aid for the self-employed and those working in the arts is under discussion, he said.“We’re in a very difficult situation, the infection numbers are exploding,” Altmaier said in an interview with ARD television. “It’s a threat to the health system and therefore to human life and that’s why policy makers must act.”Germany’s new coronavirus cases rose Wednesday by a record 14,964 to a total of 464,239, according to data from Germany’s public health institute.“We are currently in a critical phase of the pandemic,” Health Minister Jens Spahn said after the cabinet approved new measures including expanding laboratory testing capacity and support for working parents. “The situation is serious.”While the situation in Germany is deteriorating rapidly, governments elsewhere in Europe are faced with even more alarming increases in infections and deaths.French officials favor a one-month lockdown starting midnight Thursday, BFMTV reported, without identifying the source of the information. It will be more flexible than the initial shutdown in the spring, the report said.French deaths linked to the virus jumped by 523 to 35,541, health authorities reported Tuesday, the biggest daily increase since April 22.As governments grapple for an effective response, European Commission President Ursula von der Leyen stepped in with a set of proposals ahead of Thursday’s conference call with European Union leaders.The measures include improving the flow of real-time data between member states, implementing rapid testing, expanding the use of mobile tracing apps, nudging countries to speed up vaccination strategies and creating common protocols to restore safe travel.(Updates with company aid, economists comment, latest market reaction)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.