Live Markets: Banks: why this bull run may be nearing its end

ABN Amro Bank NV

26/08/2026 12:10

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BANKS: WHY THIS BULL RUN MAY BE NEARING ITS END
European banks remain among Citi's overweight sectors, but analysts there are cautioning investors that the easy gains may already be behind them.
The sector has been a standout performer in recent years, helped by earnings strength and a steady stream of upgrades, and more than 80% of lenders in the region beating consensus profit expectations in the second quarter.
Yet the brokerage argues that the drivers of the next leg higher are changing, noting that "upgrades have now broadened to other sectors too, reducing the scarcity value" and that valuations are no longer at screaming cheap levels.
"We remain overweight European Banks but would argue that we are now closer to the end of the current bull run," Citi analysts led by Andrew Coombs write in a note on Wednesday.
Citi expects future earnings growth to depend increasingly on loan volumes rather than interest rates, supported by AI-related investment, alongside initiatives aimed at deepening customer relationships and avoiding disintermediation.
It sees banks pivoting towards greater balance-sheet growth through organic volume growth and acquisitions, a shift likely to come at the expense of share buybacks.
"Valuations are still not demanding, but nor are they excessively cheap anymore either," Citi says, naming ABN ABNd.AS, NatWest NWG.L and SocGen SOGN.PA top picks.
     
(Danilo Masoni)
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EARLIER ON LIVE MARKETS:
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MSCI EU Banks price to book ratio https://tmsnrt.rs/3UUzlJX