Just days before the latest European banking stress test results are published, analysts are on high alert for any signs of impending crisis in the sector as Deutsche Bank publishes its latest earnings. But, as Laura Frykberg reports, markets also warm to Santander's profit figures.
Deutsche Bank's been in plenty of hot water over its litigation issues. Could it be in deeper water too - under the burden of low interest rates and volatile markets? Revenue waned 20% in the second quarter, now it's weighing up more cuts to save costs. (SOUNDBITE) (English) REUTERS INVESTMENT BANKING COLUMNIST, DOMINIC ELLIOTT SAYING: "Deutsche Bank is locked in this restructuring battle. It's desperately trying to cut costs, it is trying to get all of its legal cases behind it. But unfortunately when you look underneath all of that, the profitability that it is generating isn't great. And it needs that to improve a lot because ultimately it needs more capital." So does the world's oldest surviving lender, Italy's Monte de Paschi The bank is attempting to boost it though, ahead of a stress test on Friday. Some say a little help, could go a long way. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "The ammunition available to the Italian government is fairly limited because of state aid rules in the euro zone. So a lot of this hinges on the ability of the Italian government to convince the euro zone authorities that some form of intervention in terms of capital injection can be justified." Spain's Santander has had a rough time too. Its net profit fell 50 percent. Reeling from restructuring costs and payments to an EU banking fund. But profits still came in above forecasts - helping give its shares a two per cent boost.