Citi reviews its picks among European banks after rally

Svenska Handelsbanken AB

26/03/2025 06:36

** Citi updates its top picks among European banks after the sector rallied this year on fiscal stimulus hopes

** STOXX Europe banks index .SX7P is up 28% YTD

** The sentiment around the sector is likely the most positive in 20 years, but Citi says it sees zero net profit growth in 2025 and the sector no longer screens as cheap

** Citi says any boost from fiscal stimulus to GDP growth is more likely to come in 2027-28 rather than 2025-26

** Citi sees limited near-term EPS benefit, noting that the risk of tariffs is still looming

** It favours lenders that have not re-rated as sharply as peers, offer near-term EPS upgrade potential and attractive yields

** Citi's top picks are HSBC HSBA.L, Intesa ISP.MI, Natwest NWG.L, while on the other side of the spectrum are Deutsche Bank DBKGn.DE, Handelsbanken SHBa.ST and UBS UBSG.S

 (Reporting by Anna Pruchnicka)

 ((anna.pruchnicka@tr.com))