Outlook for European banks is best in 20 years, GS says

Erste Bank AG

27/03/2025 14:13

** Goldman Sachs reiterates its "better for longer" view on European banks, saying that current outlook is arguably better than at any point in the past 20 years

** Even though European banking index .SX7P is up 29% YTD valuation on absolute basis remains inexpensive, GS says

** "We see scope for further re-rating, although more limited than at the start of the year", it adds

** The broker sees Erste ERST.VI, UniCredit CRDI.MI, BNP Paribas BNPP.PA, ING INGA.AS and Deutsche Bank DBKGn.DE as well positioned to capitalise on the higher growth outlook in Germany and neighbouring economies

** GS upgrades ING to "buy" from "neutral" as it sees outperformance to be driven by NII already troughed in Q4, with a ROTE uplift through to 2027

** It reinstates UniCredit with "buy" rating due to strong fee income evolution, and prudent opex control, noting that the Italian lender maintains a leading position on capital distribution

** It reinstates Commerzbank CBKG.DE with a "neutral" rating as the bank has already seen strong outperformance YTD, although it is still set to benefit from a solid earnings outlook going forward

** It reiterates "buy" for UBS UBSG.S, but with a less constructive view based on a shift in likely outcomes related to incremental capital requirements

 (Reporting by Tiago Brandao)

 ((Tiago.Brandao@thomsonreuters.com;))