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European banks saw their best first-half since 1997, but maintaining returns will be a challenge

European banks saw their best first-half since 1997, but maintaining returns will be a challenge

CNBC13 hours ago
European banks have had a bumper start to the year, outperforming almost all other sectors as investors reward a recent period of improved profitability — but analysts warn returns may not have as far to run in the second half. The Stoxx 600 Banks index has risen more than 28% in the first six months of this year, the strongest performance for the period since 1997, according to FactSet data. Gains have seen several banks hit decade-highs in recent weeks , including Deutsche Bank and the U.K.'s Barclays , after those lenders weathered recent market volatility to deliver strong investment banking returns . In southern Europe, lenders have been riding the high of increased M & A dealmaking, with recovering volumes and a "stabilizing" market in Spain, where the country's largest bank Intesa Sanpaolo flagged a " substantial increase " in such transactions during the second half of last year. Governing the recent landscape have also been cost-cutting and restructuring pushes, with HSBC , Santander , UBS , Societe Generale and Deutsche Bank executing revamps, along with a new focus on structured financial products and trading. European banks have meanwhile significantly boosted their profits over the last three years as central banks dragged interest rates out of a decade of ultra-low territory, a shift that appears to have been belatedly priced in this year — even with rates now falling . "One might argue that investors still didn't fully believe there had been structural change in profitability at European banks, and were concerned about lower rates causing a decline as sharply as it rose," Johann Scholtz, senior equity analyst at Morningstar, told CNBC. "But the guidance that we saw, especially after full-year and first quarter results, pointed to margin expansion at the thin end but also the impact of lower interest rates not filtering in in a full way into profitability," he said. The move out of negative rates in the euro area in 2022 had a greater impact on bank margins than the subsequent moves higher and lower within positive territory, Scholtz continued, with the latter still leaving lenders with room to maneuver via lengthening the duration of their balance sheets and hedging exposures. Many are also now benefiting from action taking during the ultra-low rate period, such as branch closures and increases in their capital under regulatory pressure, he added. M & A boom Among the strongest performers have been France's Societe Generale and Germany's Commerzbank , which have both seen their shares rocket roughly 80% in the year-to-date. As well as delivering sharply higher annual profit last year , Commerzbank has been buoyed by takeover interest from Italy's UniCredit . The sharp increase in its value since then led UniCredit CEO Andrea Orcel to tell CNBC last month that he now sees Commerzbank as too expensive to justify an acquisition, calling any bid "far away." CBK-FF 1Y line Commerzbank share price. Wider merger courtships still abound as cash-flush European banks hunt to achieve the scale of their U.S. peers, driving up the shares of many in the process. Santander this week unexpectedly announced it will acquire British high street lender TSB from Sabadell , while several other bids still hang in the balance. Sabadell itself is trying to shake off the advances of Spanish rival BBVA , and may have received some relief from Madrid's pronouncement that such a merger may only proceed if the two banks do not integrate operations for at least three years. BBVA-ES 1Y line BBVA share price. As well as increasing its Commerzbank stake to a significant 28% , UniCredit has launched an offer for Italian lender Banco BPM , though faces pushback from both the Berlin and Rome administrations. Also in Italy, Monte dei Paschi (MPS) is pursuing a reluctant Mediobanca , with MPS CEO Luigi Lovaglio on Friday saying that securing even just 35% of its takeover target would be enough to control it, according to Reuters. Defense has been one sector to outpace banking gains this year, with the Stoxx Aerospace and Defense total market index soaring nearly 50% this year, against 38% for Stoxx Banks (a wider gauge than the Stoxx 600 banking index). But banks, particularly German lenders, are also benefiting from a defense boom, with the sector set to offer a long-term stream of opportunities. That's amid Europe's 800-billion-euro ($942.6 billion) ReArm drive and the Berlin administration's pivot to relax its fiscal rules, both unveiled in spring. In addition, NATO last week announced intentions to raise individual allies' financial commitments to 5% of their individual gross domestic products by 2035. Second-half concerns Morningstar's Scholtz said that following the strength of first-half gains, he was "starting to view the sector as relatively fully valued." Market sentiment could remain positive, but Scholtz said he struggled to see a catalyst that would significantly boost banking profitability going forward, likely leaving the best-case outcome as stability — and with risks coming from a fall in banks' loan loss provisions or an increase in defaults.
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Tradeweb Reports June 2025 Total Trading Volume of $52.0 Trillion and Average Daily Volume of $2.4 Trillion
Tradeweb Reports June 2025 Total Trading Volume of $52.0 Trillion and Average Daily Volume of $2.4 Trillion

Business Wire

time43 minutes ago

  • Business Wire

Tradeweb Reports June 2025 Total Trading Volume of $52.0 Trillion and Average Daily Volume of $2.4 Trillion

NEW YORK--(BUSINESS WIRE)--Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported total trading volume for the month of June 2025 of $52.0 trillion (tn) 1. Average daily volume (ADV) for the month was $2.4tn, an increase of 25.9 percent (%) year-over-year (YoY). For the second quarter of 2025, total trading volume was a record $165.3tn and ADV was a record $2.6tn, an increase of 32.7% YoY, with preliminary average variable fees per million dollars of volume traded of $2.30 and total preliminary fixed fees for rates, credit, equities and money markets of $93.8 million (mm) 2. Excluding the impact of the ICD acquisition, which closed on August 1, 2024, total ADV for the month of June was up 13.0% YoY. Tradeweb CEO Billy Hult said: 'Tradeweb closed out the second quarter with a solid performance through the end of June, reflecting increased client engagement of electronic trading amid a backdrop of elevated market activity. The quarter was marked by several notable events, including heightened volatility in April—brought on by evolving central bank policy expectations, new U.S. tariffs announced around Liberation Day and rising geopolitical tensions in the Middle East—all of which influenced trading activity across the broader financial ecosystem. The fact that electronic trading remained sticky through this market turbulence shows how firmly it's taken hold as a go-to strategy for our clients, even in times of stress.' Record Highlights: For the second quarter of 2025, Tradeweb records included: June 2025 Highlights RATES U.S. government bond ADV was up 6.1% YoY to $223.6 billion (bn). European government bond ADV was up 10.0% YoY to $55.6bn. U.S. government bond ADV was led by strong activity in the wholesale client channel. Robust European government bond ADV was driven by strong volumes in our institutional client channel. Strong activity in the U.S. and Europe was supported by an increased number of clients trading across a diverse set of trading protocols. Mortgage ADV was up 8.4% YoY to $226.5bn. To-Be-Announced (TBA) activity was primarily driven by continued elevated dollar-roll trading and an uptick in engagement from fast money accounts. Tradeweb's specified pool platform reported strong volumes driven by a record number of clients executing on the platform. Swaps/swaptions ≥ 1-year ADV was up 13.2% YoY to $494.9bn and total rates derivatives ADV was up 6.0% YoY to $828.8bn. Swaps/swaptions ≥ 1-year saw a strong increase in risk trading activity YoY driven by U.S. tariff policy, as well as rising tensions in the Middle East, which caused global market uncertainty. This was supported by a 9% YoY increase in compression activity, which carries a relatively lower fee per million. 2Q25 compression activity as a percentage of swaps/swaptions ≥ 1-year was lower than 1Q25. CREDIT Fully electronic U.S. credit ADV was up 14.1% YoY to $8.1bn and European credit ADV remained flat YoY at $2.5bn. U.S. credit volumes were driven by increased client adoption of Tradeweb protocols, most notably in request-for-quote (RFQ), Portfolio Trading, and Tradeweb AllTrade®. Tradeweb captured 19.6% and 8.0% share of fully electronic U.S high grade and U.S. high yield TRACE, respectively, as measured by Tradeweb. We also reported 27.0% total share of U.S. high grade TRACE and 10.4% total share of U.S. high yield TRACE. European credit volumes were suppressed by geopolitical events early in the month but stabilized later as the month progressed due to record new issuance and strong client activity in Tradeweb's Automated Intelligent Execution (AiEX) tool. Cash credit Portfolio Trading ADV increased 4% YoY, with non-comp Portfolio Trading ADV increasing by 8% YoY. Portfolio Trading carries a relatively lower FPM to the broader cash credit average, with non-comp Portfolio Trading carrying a lower FPM than Portfolio Trading overall. Municipal bonds ADV was up 20.8% YoY to $494.8mm. Municipal bonds reported strong growth across the retail and institutional platforms, outpacing the broader market, which was up 14.9% YoY. 3 Credit derivatives ADV was down 18.5% YoY to $12.0bn. Lower credit market volatility led to subdued swap execution facility (SEF) and multilateral trading facility (MTF) credit default swaps activity. EQUITIES U.S. ETF ADV was down 4.5% YoY to $7.7bn and European ETF ADV was up 15.8% YoY to $3.3bn. Tradeweb's global institutional ETF volumes increased YoY as more clients joined the platform and existing clients continued to increase their usage of Tradeweb's AiEX tool. U.S. ETF wholesale volumes were lower YoY primarily due to a reduction in equity market volatility. MONEY MARKETS Repo ADV was up 27.7% YoY to $765.1bn. Global repo trading activity was supported by increased client participation across the platform. In the U.S., strong growth was driven by the effects of the Fed's balance sheet unwind. Additionally, balances in the Fed's reverse repo facility (RRP) remained at relatively low levels throughout most of the month, despite an increase into month-end. In Europe, volumes were driven by increased government bond issuance as well as market volatility. Other Money Markets ADV was up YoY to $275.7bn. Other money markets volume was driven by the inclusion of ICD volumes in June 2025. Please refer to the report posted to for complete information and data related to our historical monthly, quarterly and yearly ADV and total trading volume across asset classes. About Tradeweb Markets Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 50 products to clients in the institutional, wholesale, retail and corporates markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves more than 3,000 clients in more than 85 countries. On average, Tradeweb facilitated more than $2.4 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to Basis of Presentation All reported amounts are presented in U.S. dollars, unless otherwise indicated. In determining the reported U.S. dollar amounts for non-U.S. dollar denominated securities, the non-U.S. dollar amount for a particular month is translated into U.S. dollars generally based on the monthly average foreign exchange rate for the prior month. Volumes presented in this release exclude volumes generated by (i) unbilled trial agreements, (ii) products billed on an agreement basis where we do not calculate notional value, and (iii) products that are not rates, credit, equities or money markets products. Please see the footnotes on page 3 of the full report for information regarding how we calculate market share amounts presented in this release. Amounts for preliminary average variable fees per million dollars of volume traded and preliminary fixed fees for rates, credit, equities and money markets included in this release and in the related report are subject to the completion of management's final review and our other financial closing procedures and therefore are subject to change. Beginning with the publication of the December 2024 Monthly Activity Report, Tradeweb adjusted its methodology for reflecting acquisitions in its reported average daily volume figures. For average daily volume derived from acquisitions, the denominator is now the number of trading days that have elapsed from the acquisition date to the end date of the reporting period, and not the total number of trading days in the reporting period, which was the previous methodology. Beginning in December 2024, this methodology was applied retroactively to restate the impact of both 2024 acquisitions; the average daily volume attributable to acquisitions occurring prior to 2024 was not restated. Market and Industry Data This release and the complete report include estimates regarding market and industry data that we prepared based on our management's knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information, industry reports and publications, surveys, our clients, trade and business organizations and other contacts in the markets in which we operate. In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof and we take no responsibility for such information. Forward-Looking Statements This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our outlook and future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading 'Risk Factors' in the documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. In particular, preliminary average variable fees per million dollars of volume traded and preliminary fixed fees for rates, credit, equities and money markets are subject to the completion of management's final review and our other financial closing procedures and therefore are subject to change. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this release are not guarantees of future events or performance and future events, our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this release. In addition, even if future events, our results of operations, financial condition or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this release, they may not be predictive of events, results or developments in future periods. Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this release.

Deutsche Bank Reorganizes German Wealth Management in Fee Push
Deutsche Bank Reorganizes German Wealth Management in Fee Push

Bloomberg

time44 minutes ago

  • Bloomberg

Deutsche Bank Reorganizes German Wealth Management in Fee Push

Deutsche Bank AG is reorganizing its wealth management in Germany as the lender seeks to simplify leadership structures and boost fees from the lucrative business. The separate divisions that currently serve wealthy and affluent clients will be combined in the wealth unit, Germany's largest bank said in a statement Monday. Similar to the structure of its SME business, the operations will be organized along regional lines within Germany.

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