European Banks' Returns Beat U.S. Banks, Magnificent 7 Stocks -- Market Talk
1112 GMT - European banks' total returns have outstripped that of U.S. banks and even the "Magnificent 7" stocks since the September 2020 low point, Keefe, Bruyette & Woods say in a research note. "The very logical question we are getting now is "how much further can they go?" analysts write. They note that evolution is rarely linear but they see around 30% of upside from here, which will need a lower cost of equity and some belief in a small amount of growth. KBW expects profitability to hold up better than expected thanks to resilient net interest income from structural hedges offsetting lower interest rates, which themselves should boost loan growth. This should lead to a rerating. The STOXX Europe 600 banking subindex has gained 18% in the year to date and 46% on a 12-month basis, according to Refinitiv data. (elena.vardon@wsj.com)
(END) Dow Jones Newswires
February 18, 2025 06:12 ET (11:12 GMT)
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