Most big European banks beat analysts' Q2 profit forecasts

Most large European banks beat analyst consensus estimates for profit in the second quarter, data compiled by S&P Global Market Intelligence shows.

Twenty-one out of the 25 largest listed lenders beat Visible Alpha consensus estimates, with Dutch bank ABN AMRO Inc. leading the charge with a 16.6% beat. This was followed by Skandinaviska Enskilda Banken AB (publ) (SEB) with a 13.2% surprise to the upside, NatWest Group PLC with 13.0%, Société Générale SA (SocGen) with 12.2% and UBS Group AG with 10.7%. The only banks in the sample to miss their consensus profit estimates were Banco Santander SA, BNP Paribas SA, Svenska Handelsbanken AB (publ) and UniCredit SpA.

Analysts at Citi consider there is about 2% upside to the consensus earnings per share (EPS) they compiled. This is despite the fact that they only assume 2.50% terminal ECB rates, and 3.75% Bank of England rates, in their models, which is below implied forward curves.

"From here, we expect earnings upgrades to be increasingly driven by volumes, rather than rates, supported by new initiatives to harness the benefit from banking ecosystems and AI capex," the analysts wrote in an Aug. 26 note.

Aggregate second-quarter net profit for the banks in Market Intelligence's sample reached €51.37 billion, up 15.6% year over year and 3.1% quarter over quarter. This was supported by strong revenues from both lending income and fee-generating businesses.

For ABN Amro, recent acquisitions of German wealth manager Hauck Aufhäuser Lampe and Dutch retail lender NIBC Bank NV are strengthening its revenue base. The bank raised its 2026 NII guidance to €6.8 billion, up from previous guidance of €6.4 billion excluding NIBC. It still targets about €5.5 billion in costs for 2026 even factoring in the acquisition of NIBC.

The outperformance, alongside above-target capital levels, makes the case for ABN Amro to increase shareholder returns, according to UBS analysts. Management, however, is sticking to its guidance of a 100% payout ratio, said CEO Marguerite Bérard.

Sweden-based SEB attributed its strong second-quarter results to record fee income and corporate lending, and its management is looking to further strengthen its fee-generating business. SEB also unveiled a fresh share buyback program of up to 1.25 billion Swedish kronor ($131.2 million). The bank could look to accelerate its growth in wealth and asset management, SEB CFO Christoffer Malmer said during the bank's earnings call.

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UK-based NatWest's expansion in private banking and wealth management has bolstered its earnings. CEO John-Paul Thwaite said the bank is seeing momentum in customer growth and efficiency. The bank upgraded its profitability guidance for 2026 to a return on tangible equity of more than 19%, versus above 17% previously.

France's SocGen reported a better-than-expected 4.1% reduction in expenses in the second quarter and said it has upgraded its cost guidance for 2026. Recent cost-related actions include selling non-core businesses and overhauling its technology infrastructure. The bank outperformed other large French banks in terms of second-quarter profit increases and is set to reveal a new strategy on Sept. 21.

Switzerland-based UBS enjoyed a surge in equities trading revenue driven by market volatility. It is also on track to exceed 2026 target for underlying return on common equity Tier 1, said CFO Todd Tuckner. The bank announced a new $3 billion share buyback.

Compared to year-ago results, Germany's Commerzbank AG and UK-based HSBC Holdings PLC stood out with 94.4% and 67.2% annual increases in their second quarter net profit, according to Visible Alpha data. The former is facing a potential takeover while the latter is undergoing a global restructuring.

Commerzbank's CEO, Bettina Orlopp, said the strong quarter was a result of a successful execution of its "Momentum 2030" strategy. With UniCredit having secured 47.59% of Commerzbank as part of a takeover push, Orlopp emphasized the need for a joint strategy if the two banks were to combine to leverage their core strengths and keep execution risks manageable.

HSBC has been simplifying its business model, including via divestments and organizational restructuring, and its first-half revenue included gains from the sale of its UK life insurance unit and Malta business. It now expects to generate $2 billion in savings from the restructuring by 2027.

BNP, Europe's biggest bank, Barclays PLC and ABN Amro rounded out the top five in terms of second-quarter profit growth.

For the January to June period, France's Crédit Agricole SA registered the steepest year-over-year profit drop. CFO Clotilde L'Angevin said the bank remains on track to meet its medium- to long-term targets. The French lender identified Italy, its second biggest market, as a "strategic priority" for the group and committed to investing further in its franchise there.