The European banking sector faces an entire basket of uncertainties that tend to weigh on their performance. Big European banks such as Deutsche Bank, Credit Suisse and Barclays among others have seen weak earnings growth in 2016 due to a number of factors such as low interest rates, uncertainty around the U.K.’s vote to leave the European Union, and lack of liquidity in the market.
“European banks face three long-term headwinds that have impacted their performance over a period of time. These include the Banking Resolution and Recovery Directive, negative interest rates and non-performing loans,” Dhaval Joshi, senior vice-president at BCA Research, told CNBC earlier.
But many analysts hope the situation will start to get better now. The U.K. has already triggered Article 50 which gives financial institutions clarity to pursue long term trades and investors will be watching the ECB on Thursday for any policy guidance. Investec Economics expects no change from the ECB this week.
