The 2026 earnings season is revealing a starkly divided European banking landscape, as lenders navigate the combined pressures of the Iran war and persistently high interest rates. While some of the continent's largest institutions report robust growth, others are grappling with significant geopolitical headwinds.
HSBC, the largest bank in Europe and a heavyweight on London's FTSE 100, posted a slight contraction in profits for the first quarter. Pre-tax profit fell 1.1% to $9.38 billion (€8 billion), missing analyst expectations of $9.59 billion (€8.2 billion). The primary drag was a surge in credit impairment charges, which reached $1.3 billion (€1.1 billion), up from $876 million (€750 million) in the same period last year. Richard Hunter, head of markets at Interactive Investor, noted that these charges reflect the broader 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." He added, "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."
Despite these challenges, HSBC's pivot toward Asian wealth management continues to gain traction. Fee income from wealth management rose 18% to $2.7 billion (€2.3 billion), with net new money inflows of $39 billion (€33.3 billion). Revenue grew across all core units, including a 5% increase in the UK and a 3% rise in Hong Kong. The bank also marginally raised its full-year target for banking net interest income to $46 billion (€39.2 billion), though concerns persist over commercial real estate in mainland China.
In contrast, Italy's UniCredit delivered a strong start to the year, significantly outpacing market forecasts. Net profit rose over 16% to €3.2 billion, with earnings per share up nearly 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. The bank's press release highlighted that these results "absorbed 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." Management responded by upgrading its full-year 2026 net profit outlook to "equal to or greater than" €11 billion, up from a previous estimate of "approximately" €11 billion. This performance reinforces UniCredit's position as one of the most efficient major lenders in Europe.
The mixed results come as investors weigh the broader impact of the Iran war and high interest rates on corporate profits across the Eurozone and the UK. Last week, Deutsche Bank, Santander, and UBS all reported rising profits, suggesting that the European banking sector remains strong overall despite HSBC's underperformance. For a deeper look at how the Iran conflict is driving gains elsewhere, see our coverage of Iran War Drives BP Profits and Barclays Trading Gains in First Quarter.
In the consumer sector, AB InBev, the world's largest brewer and owner of brands like Budweiser and Stella Artois, maintained steady momentum. Revenue grew nearly 6%, with beer volume rising 1.2%. Combined revenues from its megabrands increased 8.2%, led by Corona, which grew 16% outside its home market. No-alcohol beer revenue surged 27%, while Beyond Beer—a rapidly growing category of non-traditional alcoholic beverages—jumped 37%. The company's EBITDA rose 5.3%, and its diversified geographic footprint helped balance softer demand in some territories with strong growth in emerging markets. AB InBev remains focused on digital transformation and direct-to-consumer platforms as key drivers for the rest of 2026.
As the earnings season unfolds, the divergent paths of Europe's largest banks highlight the complex interplay of geopolitical risk, interest rate policy, and strategic diversification. For more on how central banks are adapting to new economic realities, read AI Forces Central Banks to Rethink Inflation and Interest Rate Strategies.
