Net interest margins in domestic retail banking are being squeezed but net income will remain in an acceptable range for 2023, thanks to low cost of risk, solid contributions from other business lines and limited growth in expenses.

We view Société Générale’s strategy update as a realistic and comprehensive focus on the group’s existing challenges. It lacks big surprises because some of the target metrics are just the ones to be expected today from a leading European bank.

Thursday, October 12th 2023 - 3:30 PM (CEST)

The digital payments revolution suggests that banks, particularly slow technology adapters, will face growing challenges to their role. The surging presence of non-bank Payment Institutions represents a rising problem for ill-prepared incumbent banks.

Erste Group Bank AG is in the market with a temporary write-down 5.125%-trigger AT1 with a call at 5.6 years (commencing 15 October 2028), alongside a tender offer for the outstanding 6.5% AT1 callable in April 2024.

Italian government proposal AC 843, aimed at supporting borrowers in financial difficulty by giving them the option to buy back exposures already sold to third parties through ABS or loan disposals, has created significant turbulence in the NPL market.

Monday, September 4th 2023 - 3:30 PM (CEST)

Norwegian bank asset quality is underpinned by a resilient and wealthy economy and a high proportion of residential mortgages with low default rates. Commercial real estate accounts for almost half of corporate lending but this should be manageable.

Spanish bank earnings continued to improve in Q2, driven by margin expansion and low credit impairments. Liquidity and funding metrics confirm the strength of balance sheets. We see limited room for further improvements from here, though.

The positive momentum for Italian banks continued in Q2, resulting in an excellent set of results, driven mainly by wider interest margins and low loan-loss provisions. But the proposed windfall tax will curtail profitability in the second half.