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February 24, 2011updated 04 Apr 2017 1:08pm

Only Chase beats pre-crisis earnings

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.

By Douglas Blakey

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.

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.

BBVA 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.

Table showing profits at selected US and European banks

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