JPM returns preference for European over US banks

J.P.Morgan maintains its constructive view on European lenders, seeing the sector "still in the sweetspot" for a re-rating, and returns its preference for European over U.S. banks

The brokerage expects the sector's 2027 implied cost of equity, a measure of risk, to decline towards 10% from 11.5%, indicating potential for 15% upside

The re-rating expectation is based on the banks' material valuation discount, strong capital positions, and "healthy" pre-provision operating profit growth, JPM says

JPM notes bank managements are showing discipline with "sensible loan growth" and "excellent capital management" optimizing buybacks over acquisitions

Among German lenders, it cuts Commerzbank CBKG.DE to "neutral" from "overweight", seeing the stock as fairly valued, and places Deutsche Bank DBKGn.DE on positive catalyst watch

In Iberia, it moves BCP BCP.LS to "neutral" from "overweight"