Best of the European banks

Top pick: Credit Suisse

Credit Suisse, which weathered the crisis without a bailout, is a clear favourite among analysts and fund managers. With profits of Sfr6.7bn (£4.9bn) for 2009, it is one of the few banks that has managed to produce earnings comparable to pre-crisis levels.

Credit Suisse's private banking division has fared well during the crisis, as troubles at rival UBS have helped it gain new clients. Inflows have slowed down lately following the Italian tax amnesty, but the group is expanding in Asia, where it is capitalising on its reputation to target newly created wealth.

Its investment bank has also been resilient during the market upheavals, and the group is finding new growth areas, notably in India, where plans to open a new branch have been approved recently.

Runner-up: BNP Paribas

BNP Paribas – France's largest bank by market cap – is another market favourite. Although it did avail itself of state support during the crisis, it is nevertheless still regarded as one of the best-managed banks in Europe.

A strong performance in corporate and investment banking, strict cost control and a well-diversified business model enabled it to recover quickly, and the acquisition of Fortis at a knock-down price looks a shrewd move. In 2009, the group already generated E120m (£105m) of cost savings through integrating Fortis and it has a good track record in acquisitions. A potential weakness might be asset management and private banking, which experienced outflows during the fourth quarter.

Best recovery story: UBS

Once considered Switzerland's finest bank, UBS's reputation has been heavily damaged by dodgy investments on sub-prime mortgage products, accusations of complicity in tax evasion and losses heavy enough to require Swiss government help.

The appointment in February 2009 of Oswald Gruebel has restored some faith. Mr Gruebel previously turned around Credit Suisse and, judging by the most recent announcements, is on his way to repeating the trick at UBS. In an unscheduled statement ahead of a shareholders' meeting, the group revealed that pre-tax profits rose to at least Sfr 2.5bn – the highest level since the crisis began – and that outflows have reduced. But given its position as the world’s second-largest private bank, UBS needs to do more than merely reduce outflows – it needs to reverse them. Buying the shares is a bet that it can do so.

Runner-up: Unicredit

A decade-long acquisition spree has turned this Milan-based group into the fourth largest bank in the eurozone, but markets took fright at its exposure to toxic assets in eastern Europe. Analysts still see emerging markets as a potential source of growth, notably as in countries like Poland where the economy has bounced back quickly. Margin recovery in Italy is another potential catalyst, while a plan to streamline its complex structure could generate substantial costs savings.

On the downside, Italy's economy is weak, the dividend yield on the shares is mediocre and the bank's chief executive Alessandro Profumo is at loggerheads with some shareholders on restructuring plans.

When the banks next report

European banks compared