Morgan Stanley: If the Strait of Hormuz reopens, European bank stocks are expected to rebound

Glonghui, June 17 | According to a report by Morgan Stanley analysts, if the Strait of Hormuz reopens, by the end of this year, European banks’ stock market valuations should rise to 11 to 12 times their earnings. The growth of loan volumes will outpace current expectations, while the increase in bank fees will also exceed Morgan Stanley analysts’ forecasts. Morgan Stanley analysts said that the profits generated by European banks are comparable to levels before the financial crisis, even though valuations have yet to catch up. Morgan Stanley analysts pointed out that investors favor growth, so risk-chasing market rebounds will bring the greatest returns to investment banks such as Deutsche Bank and Société Générale. They stated that although AI may intensify deposit competition among banks, the technology’s broader pro-growth benefits will outweigh any impact on profit margin compression. A European banking index rose by 1.4%.