European bank stocks performed well, and J.P. Morgan expects continued gains

The Zhitong Finance App learned that analysts at J.P. Morgan Chase said that European bank stocks are in a “perfect environment” and their upward trend is expected to continue.

Analysts led by Khian Abu Hussein wrote in a report on Tuesday: “Looking ahead to 2026, we maintain a positive view of European bank stocks and confirm this position once again.” The reasons they cite include economic improvements, as well as stabilizing interest rates, inflation, and unemployment. They said that earnings growth and share buybacks also supported this outlook.

European bank stocks are expected to rise for the 13th consecutive quarter and are the best performing sector in the region since this year. The Stoxx 600 Bank Index rose 55%, while the broader benchmark index rose 13%. The stock prices of Société Générale, Commerzbank, Banco Santander, Spanish Foreign Bank, and Spain's Unicaja Banco all doubled or more in 2025.

Analysts pointed out that compared to other industries, European bank stocks are still 33% off and there is room for further growth. The banks' capital position is strong, and profits are expected to grow by around 6% each year from 2025 to 2027.

Preferred stocks that analysts are optimistic about include Barclays Bank (BCS.US), National Westminster Bank Group, Deutsche Bank (DB.US), Société Générale, CaixaBank of Spain, Standard Chartered Bank, and Austria's First Savings Bank.