European banks beat profit forecasts, Brazil overshadows Santander 

By Ariane Luthi, Tom Sims, Mateusz Rabiega and Jesús Aguado

ZURICH/FRANKFURT/PARIS/MADRID, Oct 28 (Reuters) - European banks went some way to easing investor concerns about slowing earnings momentum on Wednesday as a string of lenders reported stronger-than-expected quarterly results, pushing back against fears that a years-long profit boom is losing steam.

Deutsche Bank, BNP Paribas, Standard Chartered and Santander all beat third-quarter profit forecasts, while UBS accelerated a share buyback after reporting earnings broadly in line with expectations.

Santander's results were clouded by weaker earnings and higher provisions in Brazil, a key market where the surprise re-election of President Luiz Inacio Lula da Silva has rattled financial markets.

European banks have enjoyed record profits since 2024, fuelled by higher interest rates, sending their shares soaring. But banking stocks have fallen about 10% over the past month amid concerns over lenders' exposure to euro zone government debt and a weakening economic outlook.

HSBC also unsettled investors on Tuesday after reporting weaker-than-expected revenue growth, with some analysts pointing to rising competition for deposits and slowing interest income as signs the earnings boost from higher rates may be fading.

Shares were mixed on Wednesday. Deutsche Bank was up 3.4% and Standard Chartered up 3.7%, while UBS fell 1.1% and Santander dropped 4.2%. The European banking index was flat, in line with the broader market.

The reaction to HSBC's results, which sent its shares down more than 5% on Tuesday, highlighted how recent strong performance has raised the bar for European lenders, even as the Iran war has complicated the outlook for inflation and interest rates.

BNP BOOSTED BY EQUITY TRADERS

Investment banking divisions at European lenders generally held up well during the quarter, in some cases outperforming Wall Street rivals despite a softer environment for fixed-income, currency and commodities trading.

BNP Paribas said a surge in equities trading, fuelled by volatile markets, helped lift third-quarter profit 14% to €3.46 billion ($3.85 billion). The French bank also announced a €1.3 billion share buyback and played down the impact of rising French government bond yields on its business.

Citi analysts described the figures as a "solid set of results", helped in part by the investment bank.

At Deutsche Bank, revenue from fixed-income and currency trading fell 3%, in line with expectations and less severe than the 5% decline reported by US peers.

Overall, Germany's largest lender posted a 2% rise in profit, beating forecasts, helped by strength in its retail and corporate banking businesses.

"We are delivering on our commitments and are firmly on track to meet our 2026 objectives," CEO Christian Sewing said.

Standard Chartered also struck an upbeat tone, raising its income and profitability targets after third-quarter profit comfortably beat estimates, supported by its wealth and global markets businesses.

UBS RESULTS SEEN AS MIXED

UBS, Switzerland's largest bank, reported net profit of $2.69 billion for the three months, up 8% from a year earlier and broadly in line with the $2.71 billion expected in a company-compiled consensus forecast.

UBS repurchased $1.8 billion of shares during the quarter and plans to complete its $3 billion buyback programme by February, ahead of its previous target of mid-2027.

RBC analysts described the UBS results as "mixed with underlying revenues broadly in line with estimates but GWM (Global Wealth Management) revenues below expectations".

Despite weakness in Brazil, Santander reported a 19% rise in underlying third-quarter net profit, helped by contributions from recently acquired lenders in Britain and the US.

"At a time of heightened volatility, our combination of at-scale global businesses and diversification across Europe and the Americas is a distinctive source of strength," Executive Chair Ana Botin said.

($1 = 0.8993 euros)

(Reporting by Ariane Luthi, Tom Sims, Mateusz Rabiega, Lawrence White and Jesus Aguado. Writing by Tommy Reggiori Wilkes. Editing by Mark Potter)