Barclays, BNP, Deutsche Bank Earnings Hinge on Trading, Rates

With sector stocks trading near a six-year high, the outlook for lenders from Barclays Plc to BNP Paribas SA and Deutsche Bank AG may be ripe for a reset if earnings disappoint, Bloomberg Intelligence’s Mar’Yana Vartsaba said.A combined €5 billion has already been trimmed from 2024 revenue estimates for Barclays and BNP, and although the market has scaled back expectations for interest rate cuts, that may not be enough to prevent banks from reporting sluggish net interest income, she said.

Tuesday: Temenos’s results might help restore investor confidence after a probe rejected allegations of financial misconduct by short-seller Hindenburg Research. But even if it delivers an estimated 7.1% revenue growth, there’s still a disconnect between the market and management over medium-term prospects, especially on free cash flow, BI’s Tamlin Bason said. The company plans to present a new CEO on May 7.

Thursday: Deutsche Bank risks disappointing if its results fail to deliver positive surprises, after an almost 50% rally in the shares over the past year, BI’s Philip Richards and Tomasz Noetzel said. While interest rate cuts might hamper revenue growth for the remainder of the year, higher fees could offset lower NII expectations and benefit the investment bank, they said. Consensus shows group revenue may fall shy of the €30 billion mark the bank is targeting this year.

BASF’s adjusted Ebitda likely fell for a seventh straight quarter amid still sluggish demand, consensus shows. But an almost 20% rally in the stock from a January low signals the market expects earnings to beat estimates as inflationary pressures ease and volumes recover, according to Deutsche Bank. Cash generation will be essential, with capital spending set to remain near multi-decade highs until 2026 and cost cuts deepening, BI said.

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