With the US reporting season
for fiscal 2010 now concluded and results posted from around
one-half of the major European lenders – HSBC, Lloyds, UniCredit,
Intesa Sanpaolo and Royal Bank of Scotland are yet to report –
results are starting to return to normal.
Having hailed 2010 as a
“turnaround” year, Citigroup has returned to profit after two
successive years of losses; in Europe, it was a similar position at
ING.
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Elsewhere, Société Générale
posted a strong set of results for the 12 months to 31
December.
Net profit at SocGen rose by
over 500%, boosted by a near 30% fall in bad loan charges, its
first full year earnings since it kicked off its own five-year
turnaround plan, dubbed Ambition 2015.
BNP Paribas also posted solid
earnings (loan charges fell by over 40%) with a strong operational
performance boosted by a resilient performance from its retail
unit.
In the UK, the first of the
major banks to report, Barclays, beat analyst forecasts with a 30%
rise in net income for the year.
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By GlobalDataBBVA also caught the
headlines, increasing its net profit for fiscal 2010 by almost 10%,
despite increasingly challenging market conditions in its domestic
Spanish market, where it earns around one-third of group
revenue.
By contrast, a sharp rise in
loan provisions resulted in net profit falling by almost 10% at
rival Santander.
Although earnings rose at 9
of the largest 12 banks in the US and Europe in fiscal 2010,
JPMorgan Chase was the only lender to post a profit in excess of
the post-crisis record year of 2006.
Looking ahead, Chase CEO
Jamie Dimon said that profit would rise again in 2011.
“We are starting to see the
foundation of a broad-based economic recovery,” said
Dimon.
JPMorgan Chase-excepted,
major challenges remain for major lenders to get back to results on
a par with fiscal 2006.
Barclays in particular, faces a challenge to keep the lid
on operating expenses (up by almost 20% in 2010). Although loan
impairment charges fell by almost one-third, Barclays’ retail
profits before tax remained flat in 2010 and looking ahead, it has
recognised the need to raise its game in the light of a tightening
regulatory environment.
