Bank Shares Fall As Coronavirus Impact Spreads

Bank stocks plunged internationally on Thursday, as revealed in reports put out by various companies’ showing their Q2 earnings, demonstrating the steep effects of the COVID-19 pandemic still hovering over world economies.

A few of the banks negatively affected in the second quarter were Lloyds Bank, which reported loss provisions at a rate higher than was forecasted, and BBVA and Standard Chartered, which both saw profits slide.

The damaging effects of covid-19 is reflecting in the Quarterly earnings reports and that has put European investors on the edge of their sits.

Compounded by a record-breaking contraction in the US economy, these dreary reports brought on a sell-off across the banking sector. The Euro Stoxx Bank index, which follows the trends of the biggest banks in Europe, took a downward dive by more than 3%, and the MSCI European Banks index (which features both British and European banks) fell by 2.6%.

Key stock markets were also dragged down on Thursday. For example, the FTSE 100 fell by 2% before noon, and the DAX and Spanish IBEX 35 fell by 3% and 2.7% respectively.

Based on analysis, these sell-offs indicate that investors are taking a more pessimistic approach to business in the wake of more uncertainties brought on by the COVID-19 pandemic. Lloyds CEO Antonio Horta-Osório commented:

“We have seen the UK economy deteriorate since the first quarter.” His comment comes as the bank’s half-year profits were completely submerged by the need to set aside £2.4 billion as a loss buffer – £1 billion greater than analysts estimated. This also saw shares in Lloyds fall by 9%, an 8-year low.

Barclays is also reported to have fallen below analysts’ expectations in its Q2 results, while Santander announced a quarterly loss of about €11.1 billion, marking the biggest loss in its 163 years of operation.