MS raises European banks to 'attractive' on improved risk-reward

Morgan Stanley raises its view on the European banking sector to "attractive" from "in-line", citing receding risks to industry growth and conviction of continued yield steepening

"We raise our estimates and now see 10% EPS growth in 2026/27, which on 9x P/E is not priced in," the analysts say in a research note

MS upgrades ABN AMRO Bank ABNd.AS, AIB Group AIBG.I and Bank of Ireland BIRG.I to "equal-weight" and lifts PTs for most of the sector majors

It also highlights improved capital generation and expectations of resumed net interest income growth in the sector