{"id":233783,"date":"2025-12-15T10:20:08","date_gmt":"2025-12-15T10:20:08","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/233783\/"},"modified":"2025-12-15T10:20:08","modified_gmt":"2025-12-15T10:20:08","slug":"old-meets-new-economy-ai-boom-to-supercharge-european-banks-rally","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/233783\/","title":{"rendered":"Old meets new economy: AI boom to supercharge European banks&#8217; rally"},"content":{"rendered":"<ul data-testid=\"Summary\" class=\"summary-module__summary__QjADA\">\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Banks are &#8216;cost winners&#8217; of AI boom, BlackRock says<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">European banks remain undervalued, despite strong rally<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">AI could add $340 billion annually to global banking, McKinsey<\/li>\n<\/ul>\n<p>LONDON, Dec 15 (Reuters) &#8211; After a stellar 2025, investors expect shares in European banks to keep heading higher in 2026, supported by strong earnings and, crucially, cost savings stemming from artificial intelligence.<\/p>\n<p>As fears of a recession and <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/business\/ecbs-next-move-may-be-hike-not-anytime-soon-schnabel-tells-bloomberg-news-2025-12-08\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">interest rate<\/a> cuts from the European Central Bank have subsided, investors have turned even more positive towards European banks, revising up their expectations for the sector, despite a complicated backdrop.<\/p>\n<p data-testid=\"promo-box\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__promo-box__hVl8h\"> Sign up  <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/business\/finance\/old-meets-new-economy-ai-boom-supercharge-european-banks-rally-2025-12-15\/undefined?location=article-paragraph&amp;redirectUrl=%2Fbusiness%2Ffinance%2Fold-meets-new-economy-ai-boom-supercharge-european-banks-rally-2025-12-15%2F\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">here.<\/a><\/p>\n<p>Meanwhile, AI <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/technology\/artificial-intelligence\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">https:\/\/www.reuters.com\/technology\/artificial-intelligence\/<\/a> has emerged as a new force drawing investors to European lenders&#8217; shares, partly because a dearth of technology companies in the region has forced many to hunt for AI beneficiaries in old-economy markets.<\/p>\n<p>Banks have started to use AI to improve operational efficiency and fraud detection, as well as to reduce staff costs.<\/p>\n<p>&#8220;European banks could be a real beneficiary of AI,&#8221; said Helen Jewell, chief investment officer for fundamental equities at BlackRock, the world&#8217;s largest asset manager, with about $12 trillion under management.<\/p>\n<p>&#8220;A lot of the AI story has been focused on the revenue winners, but we also know that when it comes to AI, there is a beneficiary from the cost winners,&#8221; she said at a press event.<\/p>\n<p>UBS said in a note to investors they see AI as a key source of potential upside to banks&#8217; near-term valuations and longer- term earnings.<\/p>\n<p>But that comes with risks.<\/p>\n<p>Warnings over AI-related exuberance and the risks of a dot-com style bust have come from various sides, including the <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/legal\/transactional\/ai-investment-boom-may-lead-bust-not-likely-systemic-crisis-imf-chief-economist-2025-10-14\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">International Monetary Fund<\/a> and the <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/sustainability\/boards-policy-regulation\/bank-england-sees-risks-ai-private-credit-gilt-repo-half-yearly-update-2025-12-02\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">Bank of England<\/a>.<\/p>\n<p>And risks aren&#8217;t only AI-related.<\/p>\n<p>The ECB said euro zone banks face &#8216;unprecedentedly high&#8217; risk of shocks including geopolitical tensions, shifting trade policies, climate-related crises and even a <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/business\/finance\/euro-zone-banks-with-dollar-exposure-need-more-buffers-ecb-says-2025-11-26\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">dollar squeeze<\/a> for banks exposed to the volatile U.S. currency.Yet investors have snapped up bank stocks in earnest. Societe Generale <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/companies\/SOGN.PA\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(SOGN.PA), opens new tab<\/a> shares have rallied 140% this year, Commerzbank <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/companies\/CBKG.DE\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(CBKG.DE), opens new tab<\/a> 125% and those in Barclays <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/companies\/BARC.L\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(BARC.L), opens new tab<\/a> rose almost 70%. An index of European bank stocks <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/quote\/.SX7P\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(.SX7P), opens new tab<\/a> is up more than 60%, on top of the 25% gain in 2024 and more than four times better than the pan European index <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/quote\/.STOXX\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(.STOXX), opens new tab<\/a>.<\/p>\n<p>Investors also view them as relatively cheap, particularly when compared with U.S. banking shares. European bank stocks currently trade around 1.17 times their price-to-book value, some 40% below their 2007 peak and below the 1.7 times of their U.S. rivals, according to LSEG data.<\/p>\n<p>The chart shows European banks shares trading at around 1.17 times their price-to-book value, about half the value seen in 2007.EARNINGS EXPECTATIONS JUMP<\/p>\n<p>In terms of costs, Goldman Sachs said in a note that costs would grow at a compound annual rate of only 1% between 2025 and 2027. The U.S. bank also sees efficiency continuing well into 2026, with banks&#8217; cost\/income ratios improving by 130 basis points year on year, meaning companies are expected to spend less to generate income.<\/p>\n<p>Consulting firm McKinsey estimated last year that AI could bring the global banking industry as much as $340 billion a year in additional value, with a drop in operational costs of 20%.<\/p>\n<p>Even if AI implementation savings take years to fully emerge, it will be a big enough shift to drive greater expansion in valuations, UBS said.<\/p>\n<p>Last month, analysts raised their net revisions for the sector by the most since May 2023, and 12-month forward earnings growth expectations jumped to the highest since 2023, according to IBES data.<\/p>\n<p>Growth in bank <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/business\/finance\/euro-zone-business-lending-money-supply-growth-steady-oct-2025-11-27\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">lending<\/a> to euro zone firms is still running near its highest since mid-2023, according to the most recent ECB data. Credit growth to businesses was unchanged at 2.9% in October &#8211; just below August&#8217;s 3%, the most since May 2023 &#8211; compared to the previous month, while loan growth to households accelerated to a 2-1\/2-year high of 2.8% from 2.6%.<\/p>\n<p>BlackRock&#8217;s Jewell expects European banks to return 20-25% of market value to shareholders over the next three years via dividends and share buybacks.<\/p>\n<p>&#8220;If you put together valuation and &#8230; the shareholder remuneration, you still have an asset class that is quite attractive,&#8221; Equita co-head of research Domenico Ghilotti said, adding that merger activity is another driver underpinning the sector.<\/p>\n<p>The takeover of Mediobanca <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/companies\/MDBI.MI\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(MDBI.MI), opens new tab<\/a> by state-backed Monte dei Paschi di Siena <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/markets\/companies\/BMPS.MI\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">(BMPS.MI), opens new tab<\/a> was one of the biggest in the sector this year, transforming Italian banking. <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/business\/finance\/mps-mediobanca-takeover-opens-new-chapter-italian-banking-saga-2025-09-24\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">Other deals<\/a> could be on the way.<\/p>\n<p>&#8220;What we are seeing is economic resilience within Europe, and that means that even if we do see more rate cuts, that economic resilience&#8230; will be good for European banks,&#8221; BlackRock&#8217;s Jewell said.<\/p>\n<p>One chart shows analysts improved last month their net revisions for the sector the most since May 2023. The second chart shows 12-month forward earnings growth expectation jumped to the highest since 2023 in November.<\/p>\n<p data-testid=\"SignOff\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__extra_small__8Buss body-module__full_width__kCIGb body-module__extra_small_body__Bfz20 sign-off-module__text__LQAMP\">Reporting by Joice Alves; Editing by Amanda Cooper and Susan Fenton<\/p>\n<p data-testid=\"Body\" dir=\"ltr\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__element__5eCce article-body-module__trust-badge__5mS3f\">Our Standards: <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.thomsonreuters.com\/en\/about-us\/trust-principles.html\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__medium__2Rl30 text-module__small__sph8i link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n<p><a href=\"https:\/\/www.reutersagency.com\/en\/licensereuterscontent\/?utm_medium=rcom-article-media&amp;utm_campaign=rcom-rcp-lead\" target=\"_blank\" dir=\"ltr\" class=\"button-module__link__A3sD0 button-module__secondary__70gBu button-module__round__QDFgq button-module__w_auto__Sem-F\" data-testid=\"LicenceContentButton\" rel=\"nofollow noopener\">Purchase Licensing Rights<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Banks are &#8216;cost winners&#8217; of AI boom, BlackRock says European banks remain undervalued, despite strong rally AI could&hellip;\n","protected":false},"author":2,"featured_media":233784,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[291,82519,85421,85419,82793,289,290,82758,85715,85716,85717,85718,82517,84370,82500,82525,82530,82528,82532,82531,82529,83116,18,55396,85420,82523,82520,84366,82522,32356,82503,82527,82516,45748,87651,19,84368,82766,88143,88144,82767,94731,17,1355,82797,83122,82565,82524,82507,82510,83002,82512,84457,82,82534,107,82518],"class_list":{"0":"post-233783","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-amers","10":"tag-anlins","11":"tag-anv","12":"tag-arti","13":"tag-artificial-intelligence","14":"tag-artificialintelligence","15":"tag-bisv","16":"tag-bnk","17":"tag-bnks","18":"tag-bnks1","19":"tag-bsvc","20":"tag-ceeu","21":"tag-cen","22":"tag-cmpny","23":"tag-de","24":"tag-destocabsm","25":"tag-destoukbsm","26":"tag-destouktpm","27":"tag-destousbsm","28":"tag-destoustcm","29":"tag-eco","30":"tag-eire","31":"tag-emea","32":"tag-erep","33":"tag-es","34":"tag-europ","35":"tag-ez","36":"tag-ezc","37":"tag-fin","38":"tag-fins","39":"tag-fr","40":"tag-gb","41":"tag-gen","42":"tag-hot","43":"tag-ie","44":"tag-int","45":"tag-invbis","46":"tag-invbr","47":"tag-invbr1","48":"tag-invm","49":"tag-invm1","50":"tag-ireland","51":"tag-it","52":"tag-itec","53":"tag-mce","54":"tag-mtpix","55":"tag-namer","56":"tag-news1","57":"tag-publ","58":"tag-pxp","59":"tag-sci","60":"tag-stx","61":"tag-technology","62":"tag-topcmb","63":"tag-us","64":"tag-weu"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115723083658755295","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/233783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=233783"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/233783\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/233784"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=233783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=233783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=233783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}