Berenberg sees gradual re-rating for euro zone banks
** Berenberg says greater confidence about euro zone banks' future profitability should result in a gradual re-rating for the sector, which remains cheap given offered returns
** Short-term interest rates are expected to fall while long-term interest rates remain broadly stable, resulting in an upward sloping yield curve favourable for banks, it says
** It adds lower short-term rates can lead to a recovery in loan growth and in transactional and wealth banking revenues
** Consensus for euro zone banks' 2024-2026 NII adequately reflects the effects of expected lower interest rates, the broker says
** Their RoTE is expected to settle at about 13% in 2025/2026, close to the peak of about 14% in 2023/2024, with improved earnings outlook and balance sheet strength supporting capital distributions, it adds
** It favours banks that offer high and sustainable returns, capacity for growth, material capital distributions and undemanding valuations
** Berenberg's preferred picks are "buy"-rated AIB AIBG.I, Bank of Ireland BIRG.I, BNP Paribas BNPP.PA, CaixaBank CABK.MC, ING Groep INGA.AS and UniCredit CRDI.MI
Reporting by Marta Frąckowiak
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