Updated European Banks' Forecasts to Incorporate Impact of COVID-19

We have recently updated all our European banking models to incorporate the effects of the coronavirus. We now forecast that the median bank that we cover will book a 38% earnings decline in fiscal 2020 compared with 2019. We then, however, forecast a solid recovery in 2021 and 2022, with median earnings growth of 31% and 17% respectively. A sharp median increase of 125% in loan-loss provisions is the main driver of the expected decline in earnings, but we also anticipate that median revenue will decline by 4%. Importantly, we do not believe that any of the European banks we cover, with the exception of Deutsche Bank, will record a loss for 2020.