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Investing.com - Solid results from U.S. banks may not translate into similar returns at European peers due to report in the coming days, according to analysts at Citi.
A series of major Wall Street lenders, including names like JPMorgan Chase (NYSE:JPM), Goldman Sachs, and Bank of America, reported strong earnings this week, bolstered in part by increased trading activity in the wake of recent market ructions. But some executives flagged that uncertainty from sweeping U.S. tariffs looms over the broader economic outlook.
Second-quarter investment banking revenues from the five key U.S. banks rose by 16% year-over-year to $42 billion, but were down 6% versus the prior quarter, analysis from Citi showed.
Meanwhile, fixed income trading revenues also jumped by 15% compared to a year earlier to $18 billion, yet dropped 10% quarter-over-quarter. Equities trading revenues grew by 24% year-over-year to $15 billion, although it too dipped 5% against the previous three-month period.
In a note to clients, the Citi analysts said the U.S. lenders’ returns suggest "slightly worse results in sales and trading from the European banks, driven by regional and business mix, negative foreign-exchange translation and market share losses."
They predict that, combined, European investment banking revenues are set to come in at $15 billion, up by 10% year-over-year but falling 12% quarter-on-quarter.
"For European banks Dealogic data suggests a weaker performance, relative to U.S. peers, with only the two French banks, BNP Paribas (EPA:BNPP) and Societe Generale (EPA:SOGN) (OTC:SCGLY), set to report an increase year-over-year," the analysts wrote.
"In contrast Barclays (LON:BARC), Deutsche Bank (ETR:DBKGn) and UBS (SIX:UBSG) (NYSE:UBS) all look set to see declines."
The Citi analysts downgraded their rating of Barclays, in particular, to "neutral" from "buy," citing a recent run-up in its shares. Barclays’ stock price has surged by over 125% since the end of 2023.