0909 GMT - There is a high bar for a broad-based deterioration of European banks' asset quality due to the consequences of U.S. tariffs on companies and consumers, Morgan Stanley says in a research note. This comes after the Trump administration outlined a 20% blanket levy for the EU. "There could be upside to provisions in the more affected regions or sectors; however, we believe the overall asset quality picture remains robust," analysts write. The manufacturing sector represents only 6% of loan books, and unemployment would need to rise significantly for provisions to increase beyond estimates, they say. Near-term earnings are likely to be weighed down by renewed uncertainty on interest-rate moves, which could hit lenders' net interest income, they add. The Stoxx 600 banks index extends losses and sheds 5.7%. (elena.vardon@wsj.com)
(END) Dow Jones Newswires
April 07, 2025 05:09 ET (09:09 GMT)
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