Three of Europe’s biggest banks delivered record or above-forecast profits on Wednesday. TotalEnergies posted strong earnings, while Mercedes-Benz turned more cautious as collapsing China sales and geopolitical uncertainty weighed on the outlook.
Europe’s biggest banks and one oil major reported broadly upbeat first-quarter results on Wednesday, even as executives flagged rising uncertainty from the Middle East conflict and its ripple effects on energy prices, consumer confidence and European interest rates.
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Leading European banks have seen a short-term boost to performance as trading income benefits from volatility linked to the Iran conflict, though longer-term macroeconomic risks are building.
Germany’s largest lender, Deutsche Bank, posted a record €2.2bn quarterly post-tax profit, up 8% year on year, with pre-tax profit rising 7% to €3bn. Its private bank division saw pre-tax profit jump 39% to €681m.
Net revenues rose 2% to €8.7bn.
Assets under management climbed to €1.8tr, supported by €22bn in net inflows across its private bank and asset management units.
Chief executive Christian Sewing said: “This quarter’s record profit gives us a great start to the next phase of our strategy.”
“We have the balance sheet strength, the capabilities and the strategic positioning to serve our clients globally in a dynamic environment,” he added.
CFO Raja Akram pointed to AI and process reengineering as key drivers of cost flexibility, saying the investment bank had “served as a valued advisor to clients in a challenging macroeconomic environment.”
At the same time, provisions for credit losses rose 10% to €519m, with the bank flagging a macroeconomic overlay reflecting broader uncertainty.
The results come amid heightened economic and geopolitical uncertainty. The Middle East conflict, which erupted in late February, pushed eurozone inflation to 2.5% in March and reinforced expectations of ECB rate hikes for the first time in years — a shift that supports net interest margins in the near term but raises longer-term credit risk as energy costs filter through to households and companies.
Deutsche Bank held its full-year revenue target of about €33bn and said a €1bn buyback is underway. Its shares fell nearly 3% in Europe after the update.
Banco Santander: Spanish banking giant posts impressive results
Banco Santander, continental Europe’s largest lender by market capitalisation, also reported record results, with attributable profit up 60% to €5.5bn, boosted by a €1.9bn gain from the sale of Santander Bank Polska.
Stripping out that one-off, underlying profit rose about 12% to €3.6bn. Revenue rose 4% to €15.1bn, driven by net interest income and a 6% increase in fees.
Costs fell 3%, improving efficiency. Santander said it remains on track to meet full-year targets, including mid-single-digit revenue growth and a CET1 ratio of 12.8%–13%.
Its capital ratio rose to 14.4%, giving ample buffer to absorb potential stress.
The bank also continued shareholder returns, with a €5bn buyback underway and a target of at least €10bn in buybacks over 2025–26.
Total shareholder remuneration against 2025 results amounts to around €7.1bn, equivalent to roughly 50% of attributable profit.
One note of caution came via Santander's Openbank division, where underlying profit fell 38% to €290m, hit by a €207m provision related to potential motor finance complaints in the UK and the end of tax incentives for electric vehicles in the United States.
The bank said profit before tax would have risen 15% excluding that provision.
UBS posts 80% profit jump
UBS reported an 80% rise in first-quarter net income to $3.04bn, driven by wealth management and trading strength.
Revenue rose to CHF13.6bn (€14.7bn), while underlying pre-tax profit increased 54%.
The bank confirmed a $3bn buyback programme targeted for completion by end-Q2 and reported a CET1 ratio of 13.8%.
Executives said the Iran conflict’s economic impact remains manageable if short-lived, though duration is a key risk.
The ECB has warned that the war has triggered a downward revision to the short-term growth outlook, as energy price shocks and rising uncertainty are likely to hit purchasing power and business confidence, while also increasing financing costs for banks and firms via bond spreads and equity prices.
For now, bank earnings appear resilient — but analysts are watching credit quality closely as the macro picture evolves.
TotalEnergies net income rises 51%
French multinational oil company TotalEnergies reported a 51% rise in net income to $5.8bn (€4.95bn), supported by strong oil and gas prices and tighter global markets.
“TotalEnergies posted a strong set of first-quarter results… ahead of expectations,” said Maurizio Carulli of Quilter Cheviot, adding that “robust organic production growth is helping offset losses in the Middle East linked to the ongoing conflict.”
Production rose about 4% year on year, with similar growth expected in Q2, excluding disruption.
The company announced a 5.9% dividend increase and a $1.5bn share buyback for Q2 2026, at the top end of guidance.
It expects oil prices to remain elevated into Q2 due to delayed production restarts, while gas markets stay tight, with European prices at $14–15 per MMBtu supported by low storage and LNG competition between Europe and Asia.
German automotive outlier
At the same time, German car maker Mercedes-Benz also reported its first-quarter earnings. The carmaker reported a sharp 17% drop in operating profit to €1.9bn for the first quarter, with revenue falling 4.9% to €31.6bn.
The adjusted operating margin in the cars division slid to 4.1% from 7.3% a year earlier, and net profit fell 17% to €1.43bn.
The German carmaker is being squeezed from multiple directions, including a 27% collapse in sales in China, where lower-cost local rivals, including BYD and Nio, are pushing into the premium segment, as well as US tariff pressure and the costly transition to electric vehicles.
Despite the slump, the numbers beat analyst expectations of €1.6bn in operating profit, and shares were indicated 2.2% higher in pre-market trading.
CFO Harald Wilhelm said the company was on track for full-year group EBIT to be "significantly above" last year's €5.8bn result, pointing to healthy order books and 40 new model launches planned between 2025 and 2027 — including the all-electric CLA sedan and a revamped S-Class range.
Mercedes also flagged the Middle East conflict as a risk to consumer confidence — a concern shared widely across the European industry.
