Once upon a time, in a collective mess, the countries of Portugal, Ireland, Italy, Greece and Spain were known by the unflattering acronym of Piigs. Too much government debt and bad loans in their banking systems then threatened the future of the euro. Now, after a lengthy state backed clean-up, the tables have turned. At least in banking, Europe’s periphery may be in better shape than its core. Banks that were once deemed untouchable by investors are suddenly back in vogue.
Periphery banks have also passed rates on to savers more slowly, helping bolster margins. They are not getting much credit in their valuations, however. Share prices have risen for most European banks but they have still lagged well behind profit growth. Forward earnings multiples between six and seven times remain near crisis-era levels. That is in spite of returns on tangible equity that are expected to remain elevated until the end of 2026 at least.
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Source: SkyNews - 🏆 35. / 67 Read more »