Three of Europe's largest banks, HSBC, ABN Amro and BNP Paribas, posted better-than-expected second-quarter profits on Monday, helped by lower loan provisions and growth in retail and consumer banking.
Investment banking, which has been a growth engine for many banks over the last year, saw lower quarterly revenues at BNP and ABN Amro, on the back of tougher trading. This mirrored the results of Deutsche Bank and Societe Generale last Friday.
"Monday's results are testament to the fact that the global recovery is underway," said Hilary Cook, director of investment strategy at Barclays Stockbrokers.
Cook said recovery in the United States had helped, as all three have large exposure to the US economy.
UK-based HSBC Holdings Plc's first-half profit rose by more than half, beating market expectations, as profit increased at its Household International US consumer finance unit.
HSBC's pre-tax profit for the six months ended June 30 rose 53 percent to $9.37 billion from $6.11 billion a year earlier.
Bad debt rose to $2.8 billion from $1.54 billion because of the acquisition of Household, but this figure was below most analysts' estimates, which went above $4 billion.
Its corporate and investment banking division was up in the first half of this year over the same period last year, but the bank did not say how this compared to the first quarter, where other banks have seen declines.
Shares in HSBC, the world's third-largest bank based on market capitalisation, were up 3.42 percent at 835 pence at 1020 GMT.
Dutch bank ABN Amro beat analysts' expectations with a 26.2 percent rise in second-quarter net profit, helped by lower risk provisions due to fewer bankruptcies, and by cost controls and a strong performance in retail banking.
The bank said second-quarter net profit rose to 987 million euros ($1.19 billion) from 782 million euros a year ago.
Its wholesale banking - investment banking and brokerage - saw second-quarter net profit increase by 32.7 percent year-on-year to 146 million euros. But this was a 16.6 percent decline from the preceding quarter and disappointed analysts.
"The trading results were very disappointing, poor, and some of the (corporate) deals have been carried over into the second half," said Bank Oyens & van Eeghen analyst Ivo Geijsen.
The bank also disappointed the market on outlook, after saying its operating results would see little growth this year. Its shares were down nearly 1 percent at 17.23 euros at 1028 GMT.
French bank BNP Paribas posted 50 percent growth in second-quarter profit on Monday on lower bad-loan reserves and growth at retail units.
Rival French bank Societe Generale last week also posted increased quarterly profit on reduced loan provisions.
BNP, the euro zone's largest by market capitalisation, earned 1.352 billion euros ($1.63 billion) in the quarter, compared with 902 million euros a year earlier. It earned 2.615 billion euros for the first half of 2004.
Sales of life insurance and savings products as well as mortgage and other consumer loans generated higher revenues, while a sturdier global economy meant banks did not have to put aside as much money to cover unpaid corporate loans.
Investment banking results were not as buoyant, but some analysts said this could have been worse. Pretax profits in this division rose 40 percent to 664 million euros as loan provisions slid. This offset a 6 percent drop in revenues, amid a sector-wide bond-trading slump.
The bank's shares were down 0.29 percent at 48.24 euros.
Other banks reporting this week include the Royal Bank of Scotland, Commerzbank, Credit Suisse, Standard Chartered, Barclays and HVB.
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