Europe's big banks beat profit forecasts in the third quarter, easing investor fears that a years-long run of record earnings was running out of steam. Deutsche Bank, BNP Paribas and Santander all reported third-quarter profits above expectations on Wednesday, while UBS accelerated its share buyback and Standard Chartered raised its income and profitability targets after profit beat estimates. The results arrived after banking shares had fallen about 10% in the preceding month, amid worries about lenders' exposure to eurozone government debt and a weakening economic outlook.

A mixed reception for strong numbers

BNP Paribas was the standout in trading: surging equities trading lifted net income by about 13.5–14% to €3.46 billion, on revenues up 9.5% to €13.76 billion, and it announced a €1.3 billion buyback starting 2 November. Deutsche Bank's profit rose 2%, beating forecasts on retail and corporate banking strength, even as fixed-income and currency trading revenue fell 3%. Santander's underlying net profit rose 19%, helped by recently acquired lenders in Britain and the United States.

Why this quarter mattered

Share prices did not all rise with the profits, showing how high the bar has become. Deutsche Bank gained about 3.5% and Standard Chartered about 4.6% at the open, but UBS fell 1.7% and Santander eased 3.4% as investors focused on weaker earnings in its Brazilian business and on wealth management revenues at UBS that came in below expectations. UBS still reported net profit of $2.69 billion, up 8% from a year earlier and broadly in line with consensus, and said it would complete its $3 billion buyback by February, ahead of its previous mid-2027 target.

HSBC's results the previous day had rattled confidence, sending its shares down over 5% and raising questions about deposit competition and slowing interest income. Wednesday's broader beats suggest the boost from higher rates has not yet run its course for most large lenders, even if investors now demand more than a simple beat to push shares higher.

Sources: Reuters via Euronext and Edge Consultancy.