AXIOM AI – Should we return to Bank stocks?
The banks’ excellent results in the third quarter surprised the market and analysts’ consensus. Profits exceeded
expectations by more than 30% on average, and capital ratios reached record highs. However, it was not until the figures
on vaccine efficacy were released that the market began to show renewed confidence in the sector. Despite the strength
of the recent rally, current valuations remain excessively low. Banks are trading at a price-to-earnings ratio of 8.2x as at
2022, which represents a 43% decrease compared to 14.6x for the STOXX 600.
Banks remain, together with insurers, the cheapest sector relative to consensus.