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BANK EARNINGS: LLOYDS, DEUTSCHE, UBS

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BANK EARNINGS: LLOYDS, DEUTSCHE, UBS

Oct 29 2014, 12.40pm GMT

Stock.com

Three banks that passed the latest ECB stress test have released opposing Q3 figures alongside negative headlines: UBS in Switzerland, Deutsche in Germany, Lloyds in UK.

UBS – up 7.15% to 17.39

Highlights

  • Underlying profit before tax CHF 1.7 billion
  • Net profit attributable to UBS shareholders CHF 762 million; diluted earnings per share CHF 0.20
  • Fully applied Swiss SRB Basel III CET1 ratio 13.7%
  • Fully applied Swiss SRB Basel III leverage ratio 4.2%

Headlines

UBS have made profits and good earnings even against the news that litigation costs have mounted to 1.8 billion Swiss francs, and with additional warnings from UBS that charges associated with litigation will not decrease in the immediate future.

DEUTSCHE BANK – up 0.76% to 32.48

Highlights

  • Net revenues of EUR 7.9 billion, up 2% year over year largely reflecting higher revenues in Corporate Banking & Securities (CB&S)
  • Income before income taxes (IBIT) of EUR 266 million
  • Core Bank IBIT, which excludes the Non-Core Operations Unit (NCOU), of EUR 1.3 billion, up 8% from the prior year period
  • Noninterest expenses of EUR 7.3 billion, up 2% from 3Q2013
  • Adjusted cost base of EUR 6.0 billion, up 8% from 3Q2013
  • Net loss of EUR 92 million; post-tax return on average active equity (RoE) in 3Q2014 of negative 0.6% for the Group

Headlines

Losing on Q3 figures by a net loss of €92m in the three months to September, compared to a profit of €51m last year, Deutsche Bank has felt the impact of setting aside €894m to cover legal costs for accusations of manipulating LIBOR, mis-selling of mortgage-backed securities in the US, breaching US sanctions by doing business with blacklisted countries such as Iran, and collusion to manipulate the $5.3tn per day Forex market.

CFO of Deutsche, Stefan Krause, will move aside to oversee the bank’s cost-cutting programme, and be replaced by Marcus Schenck from Goldman Sachs.

LLOYDS – up 3.21% to 74.05

Highlights

  • Underlying profit increased 35% to £5,974 million
  • Return on risk-weighted assets increased to 3.05% (first nine months of 2013: 2.01 per cent)
  • Income of £13,898 million, up 3%
  • Underlying costs down 6 per cent and down 3% to £6,907 million including FSCS timing effects

Headlines

The bill for mis-sold payment-protection insurance has reached a total of £11.3 billion including the most recent charge for another £900 million. Lloyds are also under the spotlight for announcing job cuts of 9,000 or more than 10% of the workforce, in a move that will concentrate services to online banking – now at 10 million clients, four times the number of 3 years ago.

Despite the news, with Q3 pretax profits before one-time items of £2.16 billion beating analyst estimates of £2.07 billion, Lloyds gave a strong overall picture.

Share prices valued on 29 October 11.50am GMT

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