Why investors are worried about European bank earnings

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Big European banks are set to report their first-quarter earnings and some investors fear that poor report cards could lead to further volatility.

Big European banks are set to report their first-quarter earnings starting next week and some investors fear that poor report cards could lead to further volatility in the stock markets.

European banks are suffering from years of weak profits, massive fines, ultra-low monetary policy and uncertainty surrounding the U.K.'s exit from the European Union. The U.S. banks, on the other hand, especially the big ones like J.P. Morgan and Citi have very strong retail operations that have kept these banks resilient in the face of economic headwinds. U.S. bank earnings have been a mixed bag in the first-quarter of this year.

However, the bank's stock is still down nearly 20 percent over a 12-month period and about 40 percent since Thiam took over as the CEO in 2015.According to data firm Refinitiv, UBS is expected to report a first-quarter net profit of 856 million Swiss francs, as compared to 1.5 billion Swiss francs reported in the first-quarter of 2018.

According to data firm Refinitiv, Barclays is expected to report a first-quarter net profit of 875.6 million pounds, as compared to the heavy losses of 764 million pounds reported in the first-quarter of 2018. Deutsche Bank has been in the news regularly in the past few months due to speculation over a potential merger with Commerzbank. The merger is seen to be heavily backed by the German government in a bid to create a strong national champion. A joint operation could have a balance sheet of nearly 2 trillion euros.

RBS has continued to warn of ongoing economic and political uncertainty and highly competitive mortgage market, along with uncertainty surrounding U.K.'s exit from the European Union.

 

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