Despite an interest rate cut expected this week, profits at a handful of major European banks will remain robust, according to Berenberg. The European Central Bank appears on course to cut interest rates this week, the first reduction since 2019, despite a higher-than-expected inflation print .
Peter Richardson, an analyst at Berenberg, pointed out that past experiences negatively influence investors' optimism. "Bank investors are cautiously optimistic. Despite the recent strong performance, the sector remains cheap, on 7.4x two-year forward ," Richardson said in a note to clients on May 31.
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