Deutsche Bank Raises FTSE 100 Earnings Forecast to 12% on Energy Strength, Economic Resilience

Deutsche Bank has upgraded its full-year 2026 earnings growth forecast for the FTSE 100 index to 12%, a notable increase from its previous estimate of 9%. The revision is driven by robust earnings from the energy sector and unexpectedly resilient economic growth both in the U.K. and globally.

Outlook Raised on H1 Momentum

In a note to clients, strategists led by Francesca Mazzali highlighted that aggregate earnings for the index in the first half of the year are projected to grow by 10% year-over-year. This represents a significant acceleration from the 4% growth rate observed in the second half of the prior year, according to the bank.

The energy sector is the primary driver of this growth, expected to contribute 7 percentage points to the H1 year-over-year increase. The Basic Materials sector is also a key positive contributor, forecast to add nearly 4 percentage points to growth. In contrast, Deutsche Bank noted that consensus expectations point to the Financials and Staples sectors as being the largest drags on overall earnings.

Broader Economic Resilience

While the energy sector is doing much of the heavy lifting, Deutsche Bank expressed a more optimistic view on non-energy earnings than the market consensus. The bank's strategists pointed to a global macroeconomic environment that "has been more resilient than feared," citing upside surprises in U.K. economic growth and global PMIs remaining in expansionary territory.

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This optimism translates into a higher forecast for H1 ex-Energy earnings growth at 5% year-over-year, which implies a 2% beat versus the consensus estimate of 3%. The bank also noted that since the start of recent geopolitical events involving Iran, overall FY26 earnings estimates have been revised up by 7%, primarily due to revised expectations for Energy and Basic Materials.

Political Factors and Market Consensus

Looking ahead, the strategists stated they will monitor potential reforms under new Prime Minister Andy Burnham. However, they anticipate a "limited impact to consensus earnings estimates for the FTSE 100" from the political landscape.

While Deutsche Bank is now more positive on the ex-energy components of the index, it remains "slightly more cautious than consensus on overall FY26 growth." The current market consensus expects the FTSE 100 to deliver total earnings growth of 14% for the year.