Deutsche Bank reported record after-tax profit of 1.9 billion euros in Q2 2026, while UBS saw its underlying pre-tax profit surge 47% year-on-year to 3.9 billion dollars. The EURO STOXX Banks Index has doubled over two years and now trades at its highest level since the 2007-2008 crisis. This exceptional performance is driven by the higher for longer interest rate environment that widens banks’ net interest margins. The risk for the sector lies in a potential reversal if European borrowers start struggling under elevated borrowing costs.
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