{"id":6712,"date":"2016-07-05T10:28:21","date_gmt":"2016-07-05T14:28:21","guid":{"rendered":"http:\/\/hamiltonetfs.com\/?p=6712"},"modified":"2022-02-01T17:28:30","modified_gmt":"2022-02-01T22:28:30","slug":"european-banks-sector-profitability-almost-normal-reaching-e90-bln-in-2015","status":"publish","type":"post","link":"https:\/\/hamiltonetfs.com\/european-banks-sector-profitability-almost-normal-reaching-e90-bln-in-2015\/","title":{"rendered":"European Banks: Sector Profitability Almost \u201cNormal\u201d, Reaching ~\u20ac90 bln in 2015"},"content":{"rendered":"<p>Macro issues continue to dominate European bank valuations as the sector remains in focus, particularly following the recent Brexit vote. Given all of the concerns over European banks, it is worth noting that profitability for the sector has almost completely recovered to pre-cycle levels. In 2007 (the last \u201cnormal\u201d year), the European banks made just over \u20ac100 bln in \u201ccore\u201d earnings. At the same time, the SX7P index was over 400 (see chart below).<!--more--><\/p>\n<p><strong>In 2015, the European banks generated \u2018core\u2019 earnings of over \u20ac90 bln, while the SX7P ended the year at ~180 or nearly 60% lower than before the cycle began.<\/strong> Since year-end, concerns ranging from a \u201chard-landing\u201d in China to Brexit have pushed this widely followed bank index down another 32% to ~125. The European bank index is now 70% lower than the level when the sector last generated this level of earnings.<\/p>\n<p>It is also worth noting that the SX7P was only slightly lower at its local trough levels in late 2011\/early 2012, during which time there were serious concerns that four countries, representing ~18% of total European GDP, might default and spread contagion from the world\u2019s largest banking system (bank profitability at that time was less than half its current levels). <strong>It is difficult to know when macro issues and their utter dominance over European bank valuations will abate, but it is worth noting that the sector has nearly recovered to earnings levels achieved before the downturn.<\/strong><\/p>\n<p><a href=\"https:\/\/hamiltonetfs.com\/wp-content\/uploads\/2016\/07\/2016-07-05-European-Banks-Profitability.jpg\"><img fetchpriority=\"high\" decoding=\"async\" class=\" wp-image-6717 aligncenter\" src=\"https:\/\/hamiltonetfs.com\/wp-content\/uploads\/2016\/07\/2016-07-05-European-Banks-Profitability.jpg\" alt='european-banks-sector-profitability-almost-normal-reaching-e90-bln-in-2015' width=\"500\" height=\"375\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Macro issues continue to dominate European bank valuations as the sector remains in focus, particularly following the recent Brexit vote. Given all of the concerns over European banks, it is worth noting that profitability for the sector has almost completely recovered to pre-cycle levels. In 2007 (the last \u201cnormal\u201d year), the European banks made just over \u20ac100 bln in \u201ccore\u201d earnings. At the same time, the&hellip;<\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_custom_body_class":"","_custom_post_class":"","content-type":""},"categories":[5,6],"tags":[],"_links":{"self":[{"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/posts\/6712"}],"collection":[{"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/comments?post=6712"}],"version-history":[{"count":0,"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/posts\/6712\/revisions"}],"wp:attachment":[{"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/media?parent=6712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/categories?post=6712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltonetfs.com\/wp-json\/wp\/v2\/tags?post=6712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}