How to trade Deutsche Bank and Barclays quarterly earnings based on history

Published Wed, Apr 26 20238:52 PM EDTUpdated Thu, Apr 27 20233:40 AM EDT

Two of Europe's largest banks — Britain's Barclays and Germany's Deutsche Bank — announced their first-quarter results on Thursday. The results are only weeks after the recent banking turmoil, which resulted in the collapse of three U.S. banks and forced a takeover of Swiss lender Credit Suisse. As a result, shares of financial institutions have traded in a highly volatile environment over the period. Using data from FactSet going back five years, CNBC Pro has found how well the lenders' stock performs against benchmark indexes based on different outcomes of their quarterly earnings reports. The analysis of the last 20 quarters found that Barclays ' shares have historically outperformed 69% of the time over a week if the bank reported better-than-expected earnings per share (EPS) for the quarter. In such a scenario, CNBC Pro's analysis found that shares, on average, outperformed the FTSE 100 index by 2.7 percentage points on the day. The stock also beat the benchmark by 2.5 percentage points over a week since the results, and 13.9 percentage points a month out. However, when the bank missed EPS expectations, the stock fell on average by 5.4 percentage points more than the FTSE 100 on the day of the quarterly earnings report. Barclays shares were up 0.5% at £1.52 ($1.90) at midday on Wednesday. Analysts expect the bank to report earnings per share of 9.7 pence, according to figures compiled by FactSet. The London-headquartered lender previously beat expectations on full-year net profit in February but suffered a 19% decline from last year's earnings in part due to a costly trading blunder in the United States . BARC-GB 1Y line Deutsche Bank Meanwhile, Deutsche Bank shares have more often than not performed poorly compared to the DAX index , according to CNBC Pro's analysis. The stock has underperformed its national benchmark on the day of the results and a week out more than 50% of the time, even when the bank beats EPS estimates. However, over a month since its results are out, the stock recovers and beats the benchmark 67% of the time. The Frankfurt headquartered bank's shares beat the DAX by 2.6, 5.6, and 7 percentage points over the day, week, and month since the results, respectively, each time it beat EPS expectations. However, when the bank missed EPS expectations, shares underperformed the German benchmark by 78% of the time (by 7.6 percentage points) over a month since the earnings report. Analysts are expecting the bank to report 0.49 euros per share, according to figures compiled by FactSet. Deutsche Bank shares were trading at 9.52 euros per share ($11.87) on Wednesday afternoon. DBK-DE 1Y line