Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Citi says 'time to buy' European banks

Stock Markets Oct 06, 2016 04:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The logo of Citi bank is pictured at an exhibition hall in Bangkok
 
SX7P
+0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

LONDON (Reuters) - Citi analysts upgraded their recommendation on Europe's beleaguered banks to "overweight" within regional portfolios, citing signs of improvement in the credit cycle and loan growth as well as cheap relative valuations.

Citi acknowledged headwinds facing the sector such as pressure on profits from ultra-low interest rates, regulatory costs and potential dilution, but added it saw negative risks as being more on selective, individual banks rather than being system-wide.

European banks are trading at their cheapest relative to U.S. peers, Citi said, with stocks priced for disappointments rather than reducing risks.

The volatile trading in the shares of European banks, the biggest regional laggards in terms of year-to-date performance, has put portfolio managers in a tough spot.

"European banks have been the lightning rod for all post-GFC (global financial crisis) macro risk," said Citi analysts in a note to clients, referring to the post-Lehman bankruptcy period in financial markets that has been punctuated by a slew of risk-off events in Europe from a sovereign debt crisis to more recently the potential fallout of the UK leaving the European Union.

In their analysis across 285 global sector and regional combinations, European banks are among the worst performing over the past decade, Citi said, adding that buying them would be the world's biggest contrarian trade.

The STOXX Europe 600 banking index (SX7P) was up 0.8 percent on Thursday, but remains down by around 20 percent since the start of 2016.

Citi says 'time to buy' European banks
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email