EY - Key themes from Q4 2014 earnings calls

Key themes from Q1 2015 earnings calls

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The 1Q15 earnings season marked a strong start to the year for banks across Europe, Asia-Pacific and the Americas.

Most of the banks included in this analysis reported higher earnings, revenues and ROEs when compared to 1Q14. Management at a number of banks credited improved performance to meaningful strategic execution and strong underlying business trends. As Sergio Ermotti, CEO, UBS stated, “The results underline that our business model works, and our approach to thinking long term and acting early is paying off.”

However, a number of external factors drove positive performance during the quarter and significant questions about the sustainability of earnings cannot be ignored.

  • How long will the supportive macro backdrop continue? The overarching theme of the quarter was that the influence of Central Banks’ decisions about interest rates and diverging monetary policies around the world contributed to favorable market conditions that helped drive banks’ sales and trading revenues significantly higher.
  • When will interest rates normalize? The low interest rate environment continues to be a drag on stable sources of revenue, particularly for retail-oriented banks around the world.
  • Have banks done enough to cut costs? Many banks reported positive operating leverage, but this was driven by potentially non-repeatable revenue growth, as opposed to meaningful expense reductions.

(For more information about Q1 2015 earnings calls and the top 10 themes, download the full report.)