Sunday, March 3, 2024

European banks beat US banks in the stock market

After an already complicated 2022, US banks will have “another disappointing year” in 2023, according to a report by Michael Hewson, Chief Market Analyst at CMC Markets, which attributed this weakness “to concerns about systemic weakness in the broader banking sector.”In the meantime, in European banks, their situation is better; “although it is not as strange as it seems, because of that, in the last decade they had to deal with extremely difficult trade conditions in the form of negative rates while they sought to repair their balance sheets. in the wake of the eurozone debt crisis.”

the massive hemorrhage for American banking It started in March last year, with a sharp selloff in bank stocks following the collapse of Silicon Valley Bank affected by a perfect storm formed by rapidly rising interest rates, excessive exposure to long-term US Treasury bonds, and an excessive concentration of customer deposits in the technology sector, also exposed to the mentioned increase in men.

European Banks Beat Us Banks In The Stock Market

The actions of the Federal Reserve, the FDIC, and the big banks have been able to provide some stability to the sector, but “there remains concern about the exposure of the commercial real estate sector at a time when the US economy may be headed for a slowdown,” Hewson pointed out.

In addition, this mini-banking crisis is not only dragging the financial sector in the US but is also seen around the world. a further slowdown in mergers and acquisitions, SPACs, and IPOs. The big giants of Wall Street are the biggest beneficiaries of investment banking activity, so this low activity is also noticeable.

“What is known is that despite the greatest challenges facing the European economy, rising interest rates, and lack of growth, the valuations of European banks have increased despite some of the various problems inherited by Italian banks that remain unsolved.”

Outlook for 2024 for big banks

For 2024, where interest cuts are expected on both sides of the Atlantic, analysts seem to continue to show their preference for entities from the Old Continent. At least that’s what the valuations of fundamental analysts suggest, focusing on major players in both markets.

If the five largest banks by assets on Wall Street are analyzed, the upward potential found by experts is moderate, although Wells Fargo and Bank of America stand out, showing the capacity to rise twice as much in the medium and long term. According to the consensus compiled by Reuters, analysts overwhelmingly gave a ‘buy’ recommendation to Wells Fargo, with a target price of $55.96 per share. 15% above current levels. while Bank of America may rise to 14.70% up to $37.83.

With a high potential of 9.20%, JPMorgan Chase showed up with a target price of $190.58, according to the consensus compiled by Reuters. Citigroup is 9.90% with a price target of $55.93, and Goldman Sachs is only 8.70% with a price target of $416.34.

Faced with this scenario, the five major listed banks in the EURO STOXX 50 almost all have a double-digit potential to be added to the revaluations of the past year. One of the highest of all is that of the Spanish Banco Santander, which accumulated an increase in 2023 of 40.7%, although at the beginning of 2024, it was negative (-1.5%).

European Banks Beat Us Banks In The Stock Market

Banco Santander Quotes

Analysts consulted by Reuters gave a high potential of 34.6%, with the target price set at an average of 5.01 euros. The actions of the entity led by Ana Botín have not exceeded the 5 euro threshold since mid-2018, almost six years ago.

On the contrary, the bank with the least potential is another Spanish representative, BBVA. However, the 9.91 euros where the average analysts put the valuation represents an uptrend of 9.55%. BBVA, the best bank in the Euro Stoxx 50 last year, accumulated a remarkable revaluation of 56%, and in just one month to 2024, it has already increased by 9.9%.

European Banks Beat Us Banks In The Stock Market

BBVA Quote

Along with Banco Santander, the largest potential of large European banks is French BNP Paribas, which may increase by 35% until meeting the consensus target price set by analysts at 74.9 euros per share.

The Dutch ING GroupIt has a journey ahead to rise by 28.30%, with the target price of analysts consulted by Reuters at 15.61 euros. Finally, in Italian Intesa Sanpaolo, they set the valuation at 3.51 euros, with a high potential of 22.2% in the medium and long term.

Find out which securities have the best fundamentals to invest in and which have an upward trend in the stock market today

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