The Bloomberg agency quotes Morgan Stanley analysts who emphasize that Along with the disappearance of threats to European economic growth, an increase in profitability will remain, and the increase in net interest will resume in 2026. “Despite increases in the sector, banks trade only nine times profits, with a 41 percent discount compared to a wider market, leaving”Further space to change the valuation” – they said.
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The STOXX 600 Banks Index index has increased by 31 percent this year, which makes it the best coping group in the benchmark. Lenders benefited from high profits, a significant purchase of their own shares and huge public expenditure plans, which will probably keep interest rates at a high level in Europe.
Potential mergers and acquisitions in the sector also helped. Alvato Serrano, director of European banking in Morgan Stanley said that the target prices of his team for European banks imply an average increase by 15 %, which makes this sector “an attractive option on the market, where Morgan Stanley strategists see limited growth” by only 3 percent.
As the analysts wrote, Lenders from the region should be able to reduce the gap in the valuation in relation to the American counterparts. Morgan Stanley joins JPMorgan Chase & Co. analysts and Goldman Sachs Group Inc, who are also optimistic towards European banks.
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Morgan Stanley analysts distinguished Commerzbank AG, Lloyds Banking Group PLC, Banco Santander SA and Societe Generale SA as their best types.
