European bank stocks rise to nearly 9-year high after earnings boost

LONDON, April 26 (Reuters) – European banking stocks extended their rally to an almost nine-year high on Friday, helped by first-quarter earnings that beat forecasts and signalled lenders remained in a “sweet spot”.

The basket of STOXX 600 banks (.SX7P), opens new tab touched 197.52, a level last reached in October 2015, and was last up 1.1%, aided by a 5.7% jump in shares of NatWest (NWG.L), opens new tab after the British bank’s first-quarter results.

The index has added 16.8% this year, outpacing a 5.6% rise in the pan-European STOXX 600 (.STOXX), opens new tab and outperforming U.S. banking shares.

European bank stocks have been on a tear since they tanked in March 2023 amid the U.S. banking crisis and the collapse of Credit Suisse.

The milestone on Friday marks a significant turnaround for bank shares that have struggled since the 2008 global financial crisis amid lenders’ poor profitability, regulatory scandals and a trend that has seen Wall Street firms take market share in investment banking.

Higher interest rates since 2022 have been a game changer, boosting lenders’ bottom line and handing them windfalls that most have handed straight back to shareholders – further boosting their stock prices.

Source: REUTER