Barclays still upbeat on European banks on re-rating potential
** Barclays continues to see European banks as attractive and expects the sector to re-rate, despite the challenging environment of slow economic growth, international and domestic political risks, and lower rates
** "Current valuation levels are still far from reflecting the structural (positive) changes achieved by the European banks in terms of profitability and shareholder returns," it says
** While banks are still cheap on average, Barclays says that if they can keep return on tangible equity (ROTE) at double digit, it could prove to be a clearing event for the sector
** Broker believes DPS will growand forecasts a yield of 10.3% per year in 2025-26, including dividend and buyback
** It notes also that loan growth is starting to show sings of a pick up, while growth could also be spurred by M&A
** Barclays favours banks with longer-duration balance sheets, fee-focused operations, and diversified revenue streams, such as Lloyds LLOY.L, BNP Paribas BNPP.PA, Julius Baer Gruppe BAER BAER.S, KBC KBC.BR, and Deutsche Bank DBKGn.DE
** It upgrades KBC to "overweight" from "equal weight", hiking its PT by 30%to EUR 87, citing its attractive revenue mix
** Its least preferred names areSEB SEBa.ST, Bankinter BKT.MC, and CaixaBank CABK.MC
Reporting by Jakob Van Calster
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