European banks beat forecasts with third-quarter profit

By Ariane Luthi, Tom Sims and Mateusz Rabiega

ZURICH/FRANKFURT/PARIS, Oct 28 (Reuters) - Deutsche Bank, BNP Paribas and Santander beat third-quarter profit forecasts on Wednesday, while UBS accelerated a share buyback, easing investor concerns that a years-long boom in bank profits is losing steam.

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

European banks have enjoyed record profits since 2024, fuelled by higher interest rates and rising share prices. But banking stocks had fallen about 10% in the month before Wednesday's open amid concerns over lenders' exposure to euro zone government debt and a weakening economic outlook.

HSBC also rattled confidence on Tuesday after reporting weaker-than-expected performance, with some analysts pointing to growing competition for deposits and slowing interest income as signs banks' earnings boost from higher rates may be nearing a peak.

Shares were mixed at the open on Wednesday, with Deutsche gaining 3.5% and Standard Chartered 4.6%, while UBS dropped 1.7% and Santander eased 3.4% as investors focused on weaker earnings in its Brazilian business. The Europe banks index was flat, in line with the wider market and reflecting the high bar investors have set for banks to outperform.

EQUITY TRADERS AID BNP

France's BNP said a strong performance in equities trading, which benefited from volatile markets, helped lift third-quarter profit 14% to €3.46 billion ($3.85 billion). It announced a €1.3 billion share buyback and played down the impact of soaring French government bond yields on its business.

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, as strength in its retail and corporate banking businesses offset weakness at the investment bank.

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

The results extended Deutsche Bank's run of quarterly profits as Sewing continues a turnaround that has stabilised the lender after years of turmoil.

The market reaction to HSBC's results, which sent its shares down more than 5% on Tuesday, underscored how recent strong performances by European lenders have raised investor expectations, even as the Iran war has complicated the outlook for inflation and interest rates.

UBS RESULTS SEEN AS MIXED

In Switzerland, UBS, the country'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."

Spain's Santander, the euro zone's most valuable lender, reported a 19% rise in underlying third-quarter net profit, helped by contributions from recently acquired lenders in Britain and the US, although weaker earnings in Brazil weighed on the results.

"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)