EU FINANCIALS: Commerzbank AG: Q2 25 Results
Aug-06 08:43
(CMZB; A1/A/NR)
Very small credit positive. Top line in line ex trading income, which didn’t do well. Provisions/risk result meaningfully lower than expectations contributes to net income beat
- Total Revenue €3,019mn vs est. €2,988mn (-1.7% QoQ / 13.2% YoY)
- Interest Income €2,062mn vs est. €2,005mn (-0.4% QoQ / -0.8% YoY)
- Total Non-Interest Income €1,004mn vs est. €993mn (-16.7% QoQ / 70.2% YoY)
- Non-Interest Expenses €1,616mn vs est. €1,582mn (-0.1% QoQ / 6.0% YoY)
- Personnel €944mn vs est. €926mn (-1.0% QoQ / -1.6% YoY)
- Operating Income €1,169mn vs est. €1,106mn (-4.7% QoQ / 34.4% YoY)
- Loan Loss Provisions €176mn vs est. €202mn (43.1% QoQ / -11.1% YoY)
- Net Income €462mn vs est. €352mn (-44.6% QoQ / -14.1% YoY)
- Private & Small Business Customers
- Net Revenue €1,711mn vs est. €1,708mn (0.4% QoQ / 15.7% YoY)
- Corporate Clients
- Net Revenue €1,169mn vs est. €1,193mn (-4.9% QoQ / -2.3% YoY)
- CET1 Ratio 14.6% vs est. 14.5%
- NPL/Total Loans (bps) 202.2 vs est. 190.5
- Cost of Risk (bps) 9.7 vs est. 10.0
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ECB VIEW: UBS Maintain July Cut As Baseline Call
Jul-07 08:42
UBS reaffirm their call for a cut at the ECB’s July meeting.
- It is very much an out of consensus view, with less than 5% odds of a July cut priced into markets at the minute.
- They note that "if there is a benign outcome in the U.S.-EU trade talks over the coming week or a decision to extend the negotiation beyond the current deadline (9/14 July), we will abandon our forecast of a July cut. However, if U.S.-EU trade tensions rise again around the deadline – a key concern on our side – the probability of a July cut would arguably rise again. At the moment, the markets seem to attach only a very low probability to this risk scenario and price just -1.2bp for July. We find this surprising".
- Elsewhere, a reminder that Citi have reiterated a receive July ECB-dated OIS recommendation.
CROSS ASSET: Bonds Off Lows As Oil Softens & USD Rally Extends
Jul-07 08:35
Headline flow remains light as the bid in the USD extends and core global FI markets tick away from session lows.
- Cross-market cues likely remain at the fore.
- The only real news of note that we have seen comes via RTRS sources adding to the speculation that OPEC+ will conduct another similar-sized production increase in the coming months, which has generated some light selling pressure for crude oil.
- This will have allowed bonds to stabilise/bounce from lows.
- Elsewhere, European equity index futures edge away from highs, providing further support for Bunds.
GILTS: /SWAPS/STIR: UBS Still Like Long Expressions Following Fiscal News
Jul-07 08:26
UBS write “as we emerge from another volatile week for gilts, we think it is right to stay long. The adjustment to the welfare spending bill has increased pressure on the public finances. The question for UK rates is now about how that resolves: the potential for more borrowing, more taxes or some degree of better fortune”.
- If a degree of good fortune (lower rates as the inflation outlook improves) is not forthcoming, they think “that the potential for tax rises seems more likely than a change to the fiscal rules to fall back on borrowing that the market has made very clear it will not accept”.
- If so, UBS note that “fiscal drag should make the path to lower front-end rates easier. Lower front-end rates and adherence to the fiscal rules would then support long-term rates”.
- Nearer-term, they highlight “impact on gilt supply from restoring welfare and winter fuel payments is very modest this year and next. The DMO shortening gilt supply should have a far more important market impact”
- Their recommendation for long UK rate positions come via:
- 6m30y receiver ladders
- 30-Year SONIA vs. USD SOFR
- 5y5y/10y20y flatteners
- 2-Year SONIA
