European banks outlook

European banks were in the crosshairs today. Traders on the IG platform have been watching for any signs that a weaker economy, higher interest rates and the war in Ukraine are weighing on any of their operations.

One of the best performers has been Lloyds Banking Group PLC here in the U.K. It's domestically orientated, so pretty much insulated from what is happening further east across Europe. But despite setting aside £377 million to cover a possible bad debt pile, it said pre-tax profits came in at £3.7 billion at the first half, better than forecast, but down from last year's £3.9 billion.

Lloyds share price

Let's take a look at what's happened to the share price, because it has been one of the best performers in the European market. It's currently up 3.8%, we're off the highs. But interestingly enough, we have risen past this prior line of resistance which was established as a line of support back in December last year at 44.3 pence, currently trading at 45.23.

I was talking about this in the Early Morning Call this morning about going along with a stop-loss below the 40. And that so far is making money.

Deutsche Bank

Meanwhile Deutsche Bank AG - ADR also posted a better-than-expected earnings number a 51% rise in second quarter profit as investment banking revenues rose, though the lender was less optimistic about the division's prospects for the full-year and warned about the economic outlook.

German banks are feeling the heat of the geopolitical environment more than others across the EU because of the historical ties Germany has had with Russia. Also the country particularly is dependent on Russian energy and so its economy will be hit hard by any supply shortages.

A quick update on its trading pattern that we've seen so far today. On the IG platform. Deutsche Bank is currently losing 3.2% on its way down to this line of support at 752, currently down at 789.

Credit Suisse

Finally, Credit Suisse, the Swiss banking giant, has all sorts of problems.

It posted a mammoth second quarter loss on this 1.6 billion CHF. And the immediate resignation of the chief executive, Thomas Gottstein, who will be replaced by asset management CEO, Ulrich Körner, but the outlook is very unclear with the bank still facing higher litigation provisions.

One positive is that the company has confirmed that there are no plans to merge with another bank - that was taken positively in the market this morning. Speculation had been in the markets that the US bank State Street may be lining up an offer for the business.

Let's take a look at what's happening with Credit Suisse, which in the session today is only up by a margin of 0.6%, but I think the fact it has risen is interesting, bearing in mind the recent declines, you see not too far away from a line of support at 498. The stock is currently trading at 520 on the Swiss markets.

Jeremy Naylor | Writer, London
28 July 2022