European bank rally rolls on as Deutsche Bank, UBS report profit jump

European banks have enjoyed a remarkable resurgence in the past 2-1/2 years after more than a decade of rock-bottom interest rates and concerns about euro zone government debt, which soured investor sentiment towards their stocks.

The sector is now one of the best performing in Europe, with the STOXX Europe Banks index at its highest since late 2007 and up 143% since early 2024, as higher rates boost interest income and loan demand swells despite continued weakness of the region's economy.

Germany's biggest bank reported a 10% jump in second-quarter profit, defying expectations for a drop, as strength at Deutsche's global investment banking division offset a rise in expenses. Revenue growth during the second quarter at Deutsche's fixed income and currencies division even surpassed Wall Street rivals. JPMorgan analysts called the results "strong across the board", and shares rose 2%.