Profitability remained a challenge but improved slightly thanks to more confident sentiment, with return on equity (RoE) up by 130 basis points from a year earlier to 7% on June 30, 2017, according to the European Banking Authority (EBA).
Banking stocks showed only slight gains in the second half of 2017, falling behind those of other industries and dragging down European markets. A positive performance in the third quarter of 2017 was not enough to offset an overall subdued performance during the review period, with only a few firms’ shares trading above the flat line.
The level of recovery from financial markets turmoil in recent years differed in different countries depending on the nature of their home markets, the types of underlying collateral and the strength of their creditors’ rights. A number of banks concentrated on cleaning their balance sheets by selling off or lessening non-performing loans (NPL).
Part of the problem was that European shares recorded their biggest weekly loss in more than a year in the first week of February 2018, following Deutsche Bank’s disappointing results, which dragged the banking sector down. The FTSE 100, which includes Britain’s biggest listed companies, closed at 7,157 on February 6, 2018, down 146 points, or 2.42%.