The week ahead: Masters of the universe set for dose of corporate punishment

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The Independent Online

If you tend to get worked up over European financial services giants, then this week could prove exciting as many of the Continent's financial powerhouses will be unveiling their third-quarter igures. The big names include Commerzbank, UBS, ABN Amro, ING, Credit Suisse, Axa and BNP Paribas.

These results will follow on from Deutsche Bank's mixed third-quarter figures last week and recent US investment bank results.

While Deutsche's results were higher than market expectations, due to its strong retail banking operations, its investment banking profits were down by one-fifth. This theme in investment banking is expected to continue as Swiss banks UBS and Credit Suisse Group are expected to reveal difficult market conditions.

Another key area for the two will be private banking, with JP Morgan predicting lower activity levels and subsequent pressure on margins during the quarter. "The first half saw exceptionally strong performance for both private banks in terms of inflows, margins and cost management," according to JP Morgan. "This is unlikely to be sustained into the third quarter."

Wealth management is an important area for the two as this area accounted for 43 per cent of UBS's profit and 32 per cent of Credit Suisse's profit during the second quarter.

JP Morgan is forecasting net income of Sfr1.55bn (£706m) for UBS and Sfr1.12bn for Credit Suisse, both down considerably on their second-quarter performance.

There have been reports that Walter Kieholz, chairman of Credit Suisse, is looking at dropping the words "First Boston" from the name of its investment banking arm, Credit Suisse First Boston. It is also considering laying off staff from that division.

Commerzbank is expected to have endured a difficult trading quarter. It is expected to give details on the restructuring of its securities arm. There have been reports it is looking to scale back its investment banking operations and cull about 300 staff from that division.

There's plenty of activity in the aviation sector this week. In Europe, Scandinavian Airline Systems is releasing third-quarter figures, and the market will be keen to find evidence of cost reductions coming through from recent labour deals.

Closer to home, Ryanair is expected to reveal strong interim results with its net profit tipped to jump 11 per cent. The discount airline is expected to announce that its considerable cost reductions have continued during the second half. However, with fuel equating to one-fifth of its cost base, the market will be looking for further guidance on the impact of rising oil prices on its performance.

Williams De Broë predicts the airline will "continue to deliver impressive cost reductions", but warned that escalating jet fuel prices could "decimate margins".

Airports operator BAA is also releasing its interim figures, and these are expected to be bolstered by increased traffic and increased retail spending.

Still in transport, train and bus company FirstGroup is likely to reveal details about its exposure to higher fuel prices. Analysts warn that its future performance will be determined by the group's ability to win rail contracts. It is bidding for the Inter City East Coast and South East Trains/Integrated Kent franchises.

In the US, there's the small matter of the election, which is likely to lead to thin trading in both European and US markets on Monday and Tuesday. There is likely to be increased market volatility if there is no clear outcome, but market rallies if there is an outright winner.

However, this is not the only result market-watchers will be looking out for this week with a slew of media, advertising and technology results due out. Time Warner is expected to deliver healthy third-quarter figures with the help of its online, cable and publishing divisions. But these strong performances are expected to be offset by a disappointing result in its filmed entertainment arm. Two subsidiaries of Rupert Murdoch's News Corporation, Fox Entertainment and DirecTV are also expected to report strong quarterly figures.

Advertising giant Interpublic, which owns agencies such as McCann-Erickson, is expected to give some insight into advertising activity in the US. But analysts are predicting a continued dearth of new business and pressure on margins. Such pressure is expected to be offset in the next few years by Interpublic's cost-savings initiatives.

The biggest non-event of the week is likely to be the Bank of England's interest rate announcement on Thursday: no one is expecting any change.


Tomorrow 1

Europe: Results: (third quarter) ABN Amro , Acerinox , Scania, TDC, KPN US: Results: Cogent

Tuesday 2

UK: Results: (interim) BAA, Ryanair, Matalan

Europe: Results: (3Q) Scandinavian Airlines System, UBS.

US: Results: (3Q) DirecTV

Wednesday 3

UK: Results: (I) Pilkington, FirstGroup, Carphone Warehouse

Europe: Results: (Q3) Adidas-Salomon, BMW, Commerzbank

US: Results: (Q3) Time Warner, Interpublic Group; (first quarter) Fox Entertainment

Thursday 4

UK: Results: (I) Tate & Lyle . Scottish & Southern;

(Q3) Shire Pharmaceuticals, Millennium & Copthorne, Smith & Nephew, P&O; (final) McCarthy & Stone

Europe: Results: (Q3) AXA, AGF, Bank Austria, BNP Paribas, Credit Suisse, Deutsche Post World Net, EFG Eurobank, HVB, ING, Postbank, Sampo

Friday 5

UK: Results: (Q3) International Power