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European banking stocks slide on falling profit

July 29, 2020 11:30

European banks slide

Two European banking heavyweights have posted falling profits relate to coronavirus-related loan losses, marking a gloomy period ahead for the banking sector.

In its latest earnings report Barclays posted net income of just £695 million for the first six months of the year. This is after reporting a 42% fall in profit in the last earnings report with a £1.6 billion credit impairment charge for dealing with loans and mortgages turning bad due to the coronavirus pandemic.

While income rose 8% compared to last year - mostly due to higher trading profits from the recent market volatility - the bank's pre-tax profit more than halved from £3.1 billion last year to £1.3 billion.

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Banking giant Deutsche Bank also posted a second-quarter net loss in its latest earnings report, largely due to allocating credit loss provisions in the amount of €761 million. While the second-quarter loss amounted to €77 million, it is much less than last year's loss for the same period of €3.2 billion.

The bank now anticipates that its full-year revenue will most likely be flat but does offer a more optimistic forward guidance than analyst expectations and the bank's own previous forecasts.

How to trade banking stocks with Admiral Markets UK Ltd

If you are feeling bullish or bearish on banking stocks you can speculate on its price direction using CFDs. To get started, follow these five simple steps:

  1. Log in to your existing Admiral Markets trading account, or open a live or demo trading account in just a few minutes.
  2. Click Trade on your chosen account which will direct you to the Admiral Markets MetaTrader Web Platform.
  3. Type in a banking stock like Barclays or Deutsche Bank at the bottom of the Market Watch search box and then drag the symbol onto the chart.
  4. Use the one-click trading feature on the chart or right-click on select Trading -> New Order.
  5. Choose your entry, stop loss and target levels and position size (volume) and then confirm the trade.

Barclays monthly strategy chart

Source: Admiral Markets MetaTrader 5 Web, #BARC, Monthly - Data range: 1 July 2006 to 28 July 2020. Please note: Past performance is not a reliable indicator of future results.

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