European Bank Revival Under Threat From War-Dented Lending

After cementing their spot as top earnings performers in the fourth quarter, Europe’s biggest banks are entering this reporting season with a shakier outlook as the conflict in the Middle East roils markets.

“The scope for positive surprises appears limited,” said Roberto Scholtes, head of strategy at Singular Bank. That’s as net interest margins are “plateauing at best,” credit losses are at cyclical lows, loan growth remains subdued, capital markets activity in Europe was muted in the quarter and the steepening of yield curves came late in the quarter.