Markets
BCS

Why Shares of Barclays, Deutsche Bank, and HDFC Bank All Shot Higher Today

What happened

Several international bank stocks rose by double-digit percentages on the day, particularly European lenders Barclays (NYSE: BCS) and Deutsche Bank (NYSE: DB), which closed a respective 13% and 12% higher. Meanwhile, India's HDFC Bank (NYSE: HDB) added 10%. 

Facade reading "bank" on a building in a city.

Image source: Getty Images.

So what

European banks will benefit from the European Union's (EU) decision, handed down on Tuesday, to enact a package of temporary "capital relief" measures for the economic bloc's lenders.

Chief among these is a relaxation of banks' leverage ratio, the amount of capital they are required to park at central banks. This will free more money for loans to capital-starved European companies.

Also, both Deutsche Bank and Barclays reported their Q1 fiscal 2020 results. Typically loss-making Deutsche Bank squeezed out a net profit, in spite of the heavier provisioning that's the norm for banks these days. Barclays was a surprise overachiever; the formerly leaden British bank posted impressive gains in securities trading.

Top Indian lender HDFC had no spectacular news to report. It seems investors lifted it higher on general optimism for resilient global banks; in its most recently reported quarter, HDFC managed to raise its net profit an impressive 18% year over year.

Now what

So far, all the banks mentioned here seem to be weathering the coronavirus crisis well. The EU's move will certainly help lenders on that continent. But the world's banks are far from being out of the woods, so investors should temper today's burst of optimism with more than a dollop of caution.

10 stocks we like better than Deutsche Bank
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Deutsche Bank wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of April 16, 2020

 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends HDFC Bank. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BCS DB HDB

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More