European stock markets managed to close with modest gains on Thursday, thanks to robust corporate earnings that counterbalanced anxieties surrounding the U.S. banking sector.
The Stoxx 600 benchmark index closed 0.2% higher, while the banking sector advanced 1.1% after Deutsche Bank and Barclays exceeded profit expectations.
Banking sector gains despite challenges
Shares of Deutsche Bank increased by as much as 3.2% after reporting its 11th consecutive quarterly profit. Barclays experienced a 5.3% boost in stock value as a result of higher income from increased rates and gains in the bank’s consumer credit card division.
James von Moltke, Deutsche Bank CFO, described the recent sector volatility, including the bank’s share price plunge and credit default swap spikes, as a “test” that the bank passed “with flying colors.”
On the other hand, First Republic’s shares plummeted nearly 30% during Wednesday’s U.S. trading session, as investors remained concerned about the bank’s health.
The regional bank had reported a 40% drop in deposits to $104.5 billion in the first quarter. London-listed bank Standard Chartered announced a 21% increase in pre-tax profit ahead of estimates, and its shares experienced a slight uptick.
European payments initiative adjusts ambitions
Originally established by over 30 banks and credit card processors to rival Visa and Mastercard, the European Payments Initiative (EPI) has scaled back its aspirations.
The EPI has agreed to acquire Dutch payment company Currence Ideal and Luxembourg-based app Payconiq and now aims to launch a digital wallet and instant payments system in Germany and France by the end of the year.
The initiative intends to expand its offering to other European countries and introduce new features, such as buy now, pay later financing, digital identity features, and integration of merchant loyalty programs.
EPI’s current shareholder base comprises 16 lenders primarily located in France, Germany, and the Netherlands, including BNP Paribas, Société Générale, Deutsche Bank, and ING.
Martina Weimert, EPI’s CEO, stated that the organization’s decision to concentrate on instant payments was partly in response to European Commission legislation from last year aimed at accelerating the provision and adoption of instant payments.
She believes there is significant potential for instant payments in Europe, adding that while the EPI is no longer pursuing the establishment of a card payment system, instant payments could serve as an alternative to traditional credit and debit cards.
