European Banks Have Best Quarterly Streak Since Financial Crisis.

The rally in European banking stocks shows few signs of cooling down after another stellar quarter.

The Stoxx 600 Banks Index has surged 25% this year, its best three months since 2020. That’s made it the top-performing sector in Europe by far as investors keep increasing their exposure, and strategists see more gains ahead.

Their appetite is being driven by series of factors: firstly strong earnings seasons, hefty share buybacks and M&A potential, and now massive public spending plans that will probably keep European interest rates high. Over a 10-quarter winning streak — the longest since before the financial crisis — banks have returned over 160% including dividends, triple the 52% for the broader Stoxx Europe 600.

Following this run, some bears had expected lenders’ outperformance to start fading, particularly as central banks are now cutting rates. Instead earnings have proved their business remains resilient, while buyback programs are also driving up shares. The likes of Societe Generale SA, Commerzbank AG and Banco Santander SA — repurchasing their own shares — have climbed more than 40% this year.

The latest tailwind has been Germany passing a landmark spending package, creating a potentially unlimited supply of money to rearm to deter Russia. It will also set up a €500 billion ($540 billion) fund to invest in the country’s aging infrastructure. The country’s banks are set to benefit, with Deutsche Bank AG jumping 35% this year to trade near 10-year highs.

Source: Finance.Yahoo