Performance were also recorded in asset management

After three years of strong growth, large European banks are always very well. Evidenced by the results they were published in the first half. Of the French BNP Paribas and Société Générale to the British HSBC and Royal Bank of Scotland, the Swiss UBS and Credit Switzerland, all were recorded during this period, profits surge, often higher than the forecasts of analysts.

Despite the volatility of financial markets, one and the others were laid by the results, record, their financing and investment banks. "The financing and Investment Bank has been the main engine of the results of European banks in the first half," said Vasco Moreno, responsible of European research at Keefe, Bruyette & Woods.

In retail banking, the performance were drawn by the international Société Générale in Europe from the East and the Spanish BBVA and Santander in Latin America. The very strong demand for housing credit has also continued to boost activity. Performance were also recorded in asset management.

Finally, mergers and acquisitions operations submitted the results of some institutions, whether it be integration of HVB German by Italian UniCredit, or that of the transalpine Antonveneta by ABN AMRO Dutch.

Interest rates rise

However, after these good results, analysts ask many questions. They ask first on the evolution of the activity of the Bank of investment, by very volatile nature. While stock markets remain very chahutés on background of escalating rates, how will evolve in the coming months this activity became engine

Already, the second quarter of 2006 proved was worse than the first. "In the second quarter of 2006, almost all institutions have registered a decline of the results of their investment bank in relation to the first quarter of 2006, which had been outstanding," said Jean Sassus, analyst at Raymond James. Some institutions, such as Credit Switzerland and Deutsche Bank, had, on the other hand, face, between April and June 2006, to difficulties in the "trading" for own account.

A brake on the credit application

Years in a market more difficult, Jean Sassus same bank investment should slow, after après des slow slow ralentir ralentir après after such derivatives of rates or shares, should continue to move forward.

Retail banking growth prospects are not without also raise questions. Retail banking is certainly much less cyclical than the Investment Bank. The rise of the interest rates in Europe since December 2005 however could slow the growth of demand, and in particular that of mortgages has been exceptionally dynamic in recent years, analysts fear.

Lower margin of intermediation

It could also weigh on the margin of intermediating the banks. "Banks may find it difficult to fully reflect the increase in the rates on the loans they grant, if demand slows and competition is increasing," said Patrick Goux, analyst at Groupama. On a background of rising interest rates, claims for questionable provisions, fallen to historically low levels, could ultimately increase.

In this context, many analysts expect again a year of strong growth in results in 2006 for European banks, through their performance in the first half. But they are betting on a slowdown in growth in 2007. Keefe, Bruyette & Woods table and on an increase in earnings per share of the European banks of 17 on average in 2006, and 10 in 2007, while Merrill Lynch expected increases of, respectively, 13 and 9.

"The most affected banks could be those which are very present in the Investment Bank." "The banks diversified in retail banking and geographically would be less affected", considers Vasco Moreno, Keefe, Bruyette & Woods. According to the Standard & Poor's rating agency, institutions that perform most of their activity in the investment, such as Deutsche Bank, Credit Switzerland or UBS Bank, could even save a slight decrease in their 2007 results, if financial markets deteriorated.

But the rating agency, that also a slowdown in the growth of the industry in 2007, very confident on his health. Indeed, it considers that most groups have become less cyclical, is being internationalized and diverse in terms of occupations, and that they have improved their management practices, including risk coverage.