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ING, SocGen give markets surprise boost

Thursday, November 03, 2016 - 01:41

Upbeat earnings from eurozone banks give European stock markets a surprise boost - Societe Generale rising more than 5 percent and ING Groep up 3.8 percent after the results. Credit Suisse, however, seen trailing its rivals on trading revenues over the third quarter while upping its litigation costs. Ivor Bennett reports.

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They've had a tough time of late. But are the glory days returning for Europe's banking sector? A 22 percent increase in underlying net profit at ING just one of many third quarter surprises. SOUNDBITE (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "The outlook is starting to gradually improve, even though there's a big acknowledgment of problems at the banks. The higher yield environment that we're approaching now does bode well for future profitability." SocGen is another turning the picture on its head. Net income fell by less than 3 percent rather than the 33 percent expected. A bumper trading quarter and a recovery in foreign retail business helping to offset a fall in revenue back home. SOUNDBITE (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "Those with the investment banking business, they've really just been helped by an increase in M&A deals for some, and the increase in volatility in bond markets. So creating a bit more bond-trading revenue." The sector's not out of the woods yet though. Take Credit Suisse. Real estate sales - a result of restructuring - helped them to a profit of 41 million Swiss francs. But when markets opened, shares continued to fall. For them, it's an issue of declining margins. If for others in the sector, it's non-performing loans. SOUNDBITE (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "It's their business mix. How closely are they aligned to some of the riskier areas of the market and riskier areas around the world? And put those mixes together - they're going to be the ones under pressure." Those who aren't are the ones further ahead in their restructuring. While Credit Suisse is on target to shed 6000 jobs this year, overall head count at the bank has in fact risen.

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ING, SocGen give markets surprise boost

Thursday, November 03, 2016 - 01:41