Bank profits have soared across Europe but the outlook is darkening

Investors watching rising interest rates along with the wars in Israel and Ukraine

The headquarters of the Deutsche Bank in Frankfurt: The giant lender reports this week.

Bank profits in Europe likely reached their highest point since the financial crisis this year, climbing in lockstep with interest rates. As the economic outlook darkens amid unfolding geopolitical crises, the focus this earnings season could now turn to margin pressure and signs of souring loans.

“Banks are generating peak earnings. The third quarter will be a chance to take their pulse and see how this very positive situation is normalising, for example because they’re passing on higher rates to clients,” said Alexandra Annecke at Union Investment in Frankfurt.