Wall Street Journal
Not good enough: PayPal reported a 28% increase in second quarter profit as total payment volume rose 29%. Despite beating estimates, the stock fell 3% on the news. That’s because the “stock was priced for stellar, not solid,” earnings, the paper says. "Why would investors be unhappy with such rapid and predictable growth? They were expecting an acceleration."
Charging ahead: Visa said its fiscal third quarter earnings rose 13% despite taking a $600 million charge to cover litigation expenses from its long-running legal dispute with merchants. Payment volume rose 11%.
Baby steps: Deutsche Bank’s better-than-expected second quarter earnings were largely driven by cost cuts, while revenue “continued to shrink across the board.” And the bank is “very far from making acceptable returns.” Still, it was a “good start,” and if the bank “can clock up several quarters of controlled cost-cutting and minimal revenue losses, then investors will begin to believe it can eventually get there.”
First lady: Macquarie Group named Shemara Wikramanayake, the head of its asset management arm, to be its next CEO. She would be the Australian investment bank’s first female leader. She will succeed Nicholas Moore, who is retiring in November.
“The appointment is a significant landmark for women in the global investment banking industry, where the most senior executive roles at the biggest banks continue to be dominated by men.” Macquarie shares fell.
Weak quarter: Banco Santander, the eurozone’s largest bank by market capitalization, said second quarter earnings fell 3%, largely due to €300 million in integration costs following its takeover of Banco Popular, plus a strong euro. Santander Consumer USA Holdings "on Wednesday reported a surprising improvement in credit quality," according to American Banker.
Loyal to a fault: The introduction of Open Banking in the U.K. was supposed to mean fintech startups like Monzo, Revolut and Starling Bank would be eating traditional banks’ lunches. “But, judging by a new set of data, they haven't even got started on their breakfast. It seems U.K. consumers are still pretty loyal to their good old-fashioned banks.” A survey of more than 1.5 million mobile banking users in the U.K. found the top 10 most popular banking apps were all from traditional high-street banks, none from fintechs.
The Financial Conduct Authority wants to do something to promote more competition in the U.K. retail banking business. It is considering forcing banks to pay a minimum interest rate on savings accounts to all customers after finding that they “take advantage” of consumer unwillingness to switch banks. The FCA said previous efforts to improve competition “did not stimulate sufficient changes in customer behavior.”
Moving out: U.K. banks must show how they will staff and operate their new offices in the European Union after Brexit. “It is the clearest sign yet that the shift in banking jobs from Britain may rise significantly from the modest 3,500 to 12,000 forecast in the short term by the City of London financial district.”
“I have worked with Shemara for more than 30 years and I am reassured in deciding to retire later this year that I leave Macquarie in as strong position and in safe hands.” — CEO Nicholas Moore on his successor, Shemara Wikramanayake.