JPM returns preference for European over US banks

Banco Comercial Portugues SA

09/09/2025 07:17

** J.P.Morgan maintains its constructive view on European lenders, seeing the sector "still in the sweetspot" for a re-rating, and returns its preference for European over U.S. banks

** The brokerage expects the sector's 2027 implied cost of equity, a measure of risk, to decline towards 10% from 11.5%, indicating potential for 15% upside

** The re-rating expectation is based on the banks' material valuation discount, strong capital positions, and "healthy" pre-provision operating profit growth, JPM says

** JPM notes bank managements are showing discipline with "sensible loan growth" and "excellent capital management" optimizing buybacks over acquisitions

** Among German lenders, it cuts Commerzbank CBKG.DE to "neutral" from "overweight", seeing the stock as fairly valued, and places Deutsche Bank DBKGn.DE on positive catalyst watch

** In Iberia, it moves BCP BCP.LS  to "neutral" from "overweight"

(Reporting by Vera Dvorakova)

((vera.dvorakova@thomsonreuters.com))