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European Banks: 2024 Q1

After a 14% year-to-date valuation increase, we estimate that the average European bank offers only a modest 10% upside to our fair value estimate. We expect limited earnings growth for the sector in 2024 with the benefit of higher interest rates in the base now. We highlight that we believe European banks' profitability has increased structurally in a normalized interest rate environment.

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What's Inside

  • European banks should continue to return capital to shareholders through generous dividends and share buybacks.

  • ABN Amro, Commerzbank and UniCredit stand out as banks with significant excess capital.

  • The credit quality of commercial real estate loans is the main downside risk to our expectations.

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