Daily briefing - 1 February 2017
Fin Keegan: 1st February 2017 12:18pm
Another day, another set of results from a Spanish bank: this time it is the turn of BBVA, which reported a rise of 32 percent net profit for the year just ended. The bank said it would have been more, but for refunds being paid on foot of missold mortgages. As is the case also with its domestic competitors, the European ruling on mortgage floor clauses is proving costly to obey.
Far to the North, Sweden's SEB reported operating profit of 5.56 billion crowns [$635 million] for Q4, slightly above the previous year's performance. SEB is small, while Deutsche Bank in neighbouring Germany is one of the world's largest universal banks. With $630 million in fines already this week for Russian mirror trades, the German giant is having an undeniably rocky start to 2017. Now it is not ethical breaches that are at issue, but capital levels. In a piece on the bank's ongoing challenge, the Financial Times notes that a capital increase may be inevitable as the combined pressures of low interest rates, steep competition and regulatory fines take their toll. Andrew Coombs, a Citigroup analyst, told the paper that, "in comparison with [the bank's] targets for 2018, we think they have a €400m shortfall on their common equity tier one ratio and a €5.8bn shortfall on their leverage ratio".
Any snapshot of European banking, however brief, cannot fail to take account of the latest news from Italy: today the signs are more encouraging than usual. UniCredit, reports Reuters via an exclusive source, has told investors that the ECB is happy with the latest plan to restore the balance sheet of the country's largest bank.
Finally its been a busy week for Mastercard. A High Court ruling in London brought some good news for the scheme: having been accused of setting anticompetitive interchange fees on consumer cards, the judge found that the company was only doing what was necessary. "Mastercard views this decision as a confirmation of the legitimacy and importance of interchange in our payment system and a recognition that its value based interchange rates were lawful and compliant with competition law." Fourth quarter results were also announced by the firm. Although revenues rose to $2.76 billion for the fourth quarter of 2016, up 9.5 percent over the same period in 2015, performance fell just shy of top line projections.