Another batch of European banks from Intesa Sanpaolo to UniCredit, from Societe Generaleto Credit Agricole report results in days to come.
Hopefully they will confirm that the continent’s lenders have emerged from the doldrums to become the proxy of choice to play the reflation trade through a massive portfolio rotation into undervalued and cyclical stocks.
The earnings season so far has been heartening, with some 65% of reported results exceeding expectations, topping the usual 51% watermark.
European bank shares have risen more than 20% this year outstripping a 10% rise on the broader STOXX 600 index, thanks also to a rise in bond yields.
Announcements of more dividends and buybacks should be another tailwind, prompting investors to re-engage with the old continent.