UBS forecasts 13% earnings-per-share growth for European banks in 2026 — Cyprus Mail

In an article by the Cypriot publication Cyprus Mail, illustrated with a photo from Bern, Switzerland, investment bank UBS forecasts earnings per share at European banks to rise by 13% in 2026, 15% in 2027 and 10% in 2028. UBS maintains a positive assessment of the European banking sector.

Factors behind the projected growth

UBS expects bank earnings to be supported by lending growth, higher equilibrium interest rates, a steeper yield curve and future upward revisions to earnings forecasts. At the same time, global investors already hold significant positions in European banks but are not yet rushing to substantially increase their overall exposure to the sector.

According to UBS estimates, European banks are trading at a nearly 30% discount to the broader stock market. The sector has a multiple of 10.4 times projected 2027 earnings and 9.5 times projected 2028 earnings. The aggregate capital distribution yield, according to the bank, is between 7% and 8%.

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Greece among priority markets

In the event of high inflation or stagflation, investors may turn their attention to markets with a significant share of floating-rate loans: Greece, Italy, Ireland, Spain and Portugal. UBS named Greece a priority market in this group. Banks in the United Kingdom and France, by contrast, may face stronger pressure because of their deposit structures and mortgage portfolio characteristics.

Among individual stocks, UBS highlighted Piraeus Bank, which, according to analysts, has its own corporate catalysts. The bank also included ABN Amro, BAWAG, BCP, Raiffeisen, Santander and Standard Chartered in this category. Even without an expansion in market multiples, the sector could deliver a total return of around 35% over two years, UBS believes.