Low interest rates, Brexit fears and trade war woes may still impact European banks, despite surprisingly solid earnings in the second quarter. This was mostly due to loan repayment rates improving, justifying a reduction in funds set aside to cover risky exposure, and giving the bottom line an immediate boost.

“For many banks, earnings were better than expected,” Simon Outin, an analyst with Allianz Global Investors, told the Agence France-Presse (AFP). “But it’s also true that consensus forecasts had been lowered quite a bit recently.”

According to Jerome Legras, head of research at asset managers Axiom AI, the main adjustment variable for almost all the banks which have reported earnings are the provisions against doubtful loans which are much lower than expected “This in essence was what made the results better than analysts’ expectations,” he told AFP.

According to AFP, taking back risk provisions helped banks offset the dampening impact of a low-interest rate environment that is set to linger even as EU growth and inflation are showing signs of picking up.

French bank Societe Generale said it expects to improve its risk management further throughout the year, a hint that it could take back more provisions to feed profits.

In southern Europe, Spain’s BBVA and CaixaBank, Portugal’s Caixa Geral de Depositos and Italy’s Intesa SaoPaolo are all making progress in removing toxic loans from their books.

Even the world’s oldest bank, Monte Dei Paschi Di Siena, which was weakened by the 2008 financial crisis and took a government bailout, managed to record a profit in the three months to June.

AFP reported that Swiss banking group UBS warned rising protectionism was puncturing investor confidence, and Credit Suisse said upcoming monetary policy shifts by the world’s central banks were likely to sow uncertainty.

Meanwhile, Britain’s looming departure from the EU is a big headache for that country’s banks just as they have recovered a high level of financial strength.