Shares of Europe's largest banks have reached record levels due to rising long-term interest rates and enhanced financial performances.
Historical Surge in Stock Prices
Shares of banks such as HSBC, Barclays, and Santander have risen to their highest levels since 2008. UniCredit hit peaks not seen since 2011. The banking sector on the Stoxx 600 is up 34% for the year.
Impact of Long-Term Rates
Long-term interest rates are rising faster than short-term ones, which impacts banks' net interest income. In Germany, 30-year bond yields are 1.3 percentage points higher than two-year yields.
Political Barriers and Future Perspectives
Despite the growth, banks face political barriers that hinder consolidation within the industry. Analysts are divided on the sector's future: some predict continued growth while others anticipate possible challenges.
Key financial metrics have strengthened, but economic uncertainty and political barriers pose risks for further sector growth.
