European banks show mixed results as HSBC profits dip while UniCredit's rise
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HSBC reported a slight contraction in profits while Italy's UniCredit surpassed market expectations as banking institutions navigate a complex landscape defined by geopolitical tensions.
The health of the European banking sector is currently under intense scrutiny as the 2026 earnings season reveals how the continent's largest lenders are handling macroeconomic volatility.
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The largest bank in Europe and a top-two company on the UK's FTSE 100 index by market capitalisation, HSBC, reported a slight contraction in profits citing significant credit impairments linked to the Iran war, even as its wealth management and Hong Kong operations showed resilient growth.
HSBC also saw its net profit decline, missing some investor expectations, despite a rise in overall revenue.
Conversely, Italy's UniCredit surpassed market estimates and demonstrated a strong start to the year, leading the bank to upgrade its financial guidance for the rest of 2026.
Last week, Deutsche Bank, Santander and UBS all reported rising profits indicating that the European banking sector remains strong overall despite HSBC's underperformance.
This earnings season occurs as investors weigh the impact of the Iran war and the persistence of high interest rates on corporate profits across the Eurozone and the UK.
RelatedHSBC faces geopolitical headwinds despite wealth expansion
The latest quarterly figures from HSBC suggest a period of strategic recalibration for the global lender.
According to the bank's financial statement, pre-tax profit decreased by 1.1% to $9.38 billion (€8bn), a result that fell short of the $9.59 billion (€8.2bn) analysts had projected. The primary weight on the balance sheet was a surge in credit impairment charges, which reached $1.3 billion (€1.1bn), compared to $876 million (€750m) during the same period in 2025.
According to Richard Hunter, head of markets at Interactive Investor, these charges are a direct reflection of the current global climate.
"Credit impairments have largely blotted the copybook for this quarter, while the lack of a return to the share buyback programme may also provide some disappointment even though that return may not be far away," Hunter noted.
"As has been the case for many other global banks this reporting season, the impact of the Middle East conflict has made an appearance in the numbers," Hunter further observed as HSBC's exposure to regional instability has become visible in the report.
Despite these challenges, HSBC’s pivot toward the Asian wealth market continues to gain traction.
The wealth management division reported an 18% increase in fee income, reaching $2.7 billion (€2.3bn), while net new money inflows reached $39 billion (€33.3bn). Revenue growth was recorded across all core units, including a 5% rise in the UK and a 3% increase in Hong Kong.
While concerns persist regarding the commercial real estate sector in mainland China, the group has marginally increased its full-year target for banking net interest income to $46 billion (€39.2bn).
UniCredit upgrades 2026 guidance following profit beat
In contrast to the more cautious figures from some of its peers, Italy’s UniCredit has started 2026 with a performance that has significantly outpaced market forecasts.
According to the bank's quarterly update, net profit rose by over 16% to €3.2 billion, significantly exceeding analyst expectations compared to the same period in 2025, with EPS up almost 20% to €2.15.
Quarterly revenues grew 5% year-on-year to €6.9 billion, while net revenues rose 3.3% to €6.7 billion, "absorbing negative impacts related to interest rates, loan loss provisions, and Russia, underscoring the resilience and diversification of a model structured to perform across the entire macroeconomic cycle," the bank's press release added.
The management reacted to this momentum by raising its financial guidance for the full year 2026 upgrading its net profit outlook to "equal to or greater than" €11 billion, up from a previous estimate of "approximately" €11 billion.
This development reinforces UniCredit’s position as one of the most efficient major lenders in Europe.
AB Inbev maintains momentum amid global market shifts
In other news regarding the consumer sector, AB Inbev, the world's largest brewer which includes labels such as Budweiser and Stella Artois, maintained steady revenue momentum, navigating global market shifts through strategic pricing and with beer volume rising by 1.2%.
The company's revenue grew almost 6% with an 8.2% increase in combined revenues of megabrands, led by Corona, which grew by 16% outside of its home market.
Revenue from no-alcohol beer increased 27% and revenue from Beyond Beer, a rapidly growing category of alcoholic beverages that are not traditional beer, increased 37%.
While volume growth has faced pressure in certain markets due to inflationary trends, the company's EBITDA remains stable rising by 5.3%.
According to AB Inbev, the group’s diversified geographic footprint has allowed it to balance softer demand in some territories with strong growth in emerging markets.
The brewer remains focused on its digital transformation initiatives and direct-to-consumer platforms, which are expected to be key drivers of volume and margin expansion throughout the remainder of 2026.
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