European banks' NII growth to hit 4% in 2026, says Morgan Stanley
Morgan Stanley analysts see net interest income (NII) growth accelerating to 4% in 2026 for European banks after muted growth this year, driven by expanding margins and volume growth
Improvement in PMIs point to an acceleration in loan growth, they say, while expecting loan growth to double to 4-5% y/y at a euro area level
Project greatest acceleration in loanmaking in Spain and note that Ireland should also be strong, while among core countries, they expect lending in Germany to accelerate most
The analysts move Barclays BARC.L to their top picks, alongside Santander SAN.MC, Societe Generale SOGN.PA and ING INGA.AS, replacing Lloyds LLOY.L
They upgrade Standard Chartered STAN.L and Bank of Ireland BIRG.I to "overweight" from "equal-weight" on above-consensus revenue growth, while cutting KBC KBC.BR to "equal-weight" from "overweight" on valuation
They keep their "equal-weight" rating on BNP Paribas BNPP.PA unchanged
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