Investment banks signal buying opportunities in European banking sector

Major investment banks JP Morgan and Morgan Stanley have identified buying opportunities in the European banking sector following a recent sell-off driven by rising sovereign bond yields.

JP Morgan maintains an overweight stance on the sector, noting that banks are in strong positions regarding capital, returns, and risk absorption. The bank expects earnings per share growth of approximately 12% annually between 2026 and 2028. Top picks from JP Morgan include Natwest, Standard Chartered, UBS, Deutsche Bank, ING, and Julius Baer.

Similarly, Morgan Stanley views the recent decline as a result of profit-taking and bond market volatility rather than fundamental weakness. The firm maintains a positive outlook for Greek lenders, specifically highlighting Alpha Bank, Piraeus Bank, and Eurobank with overweight recommendations. Morgan Stanley notes that the sector's return on tangible equity is expected to remain near 17% in the coming years.