Amid growing concerns about liquidity and funding due to the collapse of several US banks and problems at Credit Suisse, According to JPMorgan, attention is likely to shift to the risks of monetary tighteningand not the idea that higher rates are good for banks.
According to a report by Reuters, the brokerage firm sees only limited impetus to improving profits at margin-focused banks if there is a significant downward shift in the forward yield curve. It also notes that with inflation still high, markets are likely by some standards to see a higher probability of a hard landing and pressure on asset quality in the sector.
JPM is particularly concerned about asset quality risk in some real estate markets, such as B. the Swedish.
As the debate revolves around liquidity and confidence, given deposit flows, Regulators may conservatively delay share buyback approvals for European banksalthough dividends should continue to be paid as planned, experts at the US broker believe.
Although European banks do not have any significant unrealized loss problems on held-to-maturity portfolios and the sector has become cheaper following recent sell-offs, the cost of equity is likely to remain elevated.
JPMorgan’s top picks are UBS, Deutsche Bank, ING, UniCredit And National Bank of Greece. would avoid commercial banks And SEB.