(Finance) – The geopolitical tensions in Ukraine have heavily impacted the performance of the stock market European banksbut having avery limited direct exposure he Russia and Ukraine continue to maintain an advantage in terms of value and improvement in performance. In addition, the results for the fourth quarter of 2021 have largely met expectationswith still favorable prospects for asset quality and strong capital return commitments. With little change in expectations for rate hikes, the outlook for European banks is therefore still positive. It is the photography of the sector made by Credit Suissewhich analyzed balance sheets as of December 31 and exposure to the war in Ukraine of the major banks of the Old Continent.
The report highlights that banks that have revealed new business plans in recent weeks are expecting ROTE higher than the consensus, aided by rate hikes, lower regulatory costs and returns on capital. “In the event of a drop we would buy Lloyds for his ambitious new plan and defensive qualities, as well as Societe Generale And UniCreditwhere we estimate that a theoretical total cancellation of Russia in the worst case would cost only 35bps on the CET1 ratio “, it is emphasized. However, the Swiss bank itself pointed out that Italy, France and Austria have the greatest exposure to Russia and among the big banks listed are Raiffeisen Bank International (20%), Societe Generale (4%) and UniCredit (4%) to have recorded the highest revenues from Russia in 2020.
Analysts note that any restrictions on European exports to Russia would have a limited impact on growth, but rising energy prices could raise inflation and curb GDP growth. “This creates downside risks, but it would still not change our base case for rate hikes,” Credit Suisse points out. interest rate expectations have changed little“The futures market still expects the ECB you start raising rates this year, with the rate exceeding 0.5% in 2023. Likewise the BoE it is still expected to exceed 1.75% in 2022 and 2% in 2023.
Reassurances also come from the results released in recent weeks. Among European large-cap banks, approx 60% beat expectations on adjusted pre-tax profit in the fourth quarter of 2021, a percentage still lower than in the first and third quarter of 2021 due to some higher one-off costs at the end of the year. In addition, several banks have increased (BNP Paribas, UBS, Nordea BankLloyds, NatWest) or accelerated (HSBCStanChart) le expectations on the ROTE. The distributions of capital were another surprising positive factor, with UBS, KBC, CaixaBank And Intesa Sanpaolo among those who have increased them, while ABN AMRO has fallen short of market expectations.
As for the banks of thesouthern Europe (and therefore also Italian), the report highlights that those geographically diversified reported encouraging growth in core revenues, supported by strong commercial dynamics and the strengthening of margins. On the contrary, the national banks They ended a year of significant NII pressures as subdued loan growth, excess liquidity costs and margin squeeze persisted throughout the fourth quarter. THE costs were a negative variable for all banks: in many cases, staff costs were higher than expected.