European banks look set to outperform through year-end, according to recently published research on the region.
The argument from analysts tracking the sector: margins are coming in better than expected, helped by higher interest rates and favourable refinancing of bond portfolios. Loan volume growth is holding up even in slower-growth European economies, and the asset quality problems many feared — driven by high energy prices and weaker GDP forecasts — have largely failed to show up in the numbers.
Researchers also point to a wave of M&A interest and strategic repositioning across European lenders as an additional tailwind for share prices into the back half of the year.
The broader read across published European equity work is that conviction calls remain sparse right now, which makes the constructive bank thesis stand out as one of the clearer regional signals on the desk.