European Banks’ First-Half Stock Gains Are Biggest This Century

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European Banks’ First-Half Stock Gains Are Biggest This Century.

stock :: 2025-07-01 :: source - bloomberg

By Macarena Muñoz

(Bloomberg) — European bank stocks just completed their strongest first-half since 1997, and in doing so extended what has been a golden run for the sector.

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The Stoxx 600 Banks Index rose 29% in the six months through June 30, the top-performing subgroup in Europe, as investors piled into lenders for their strong returns and resilient earnings. An increase in deal-making added more fuel to the fire, particularly in Italy.

Among the main highlights of a stellar first half, Banco Santander SA’s advance pushed it past UBS Group AG to become continental Europe’s most valuable lender, while Commerzbank AG’s value appreciated so much that UniCredit SpA doesn’t see it as an attractive deal target.

Looking ahead, some analysts are bullish about the sector’s ability to ride the crest of a wave despite macroeconomic uncertainty and trade-related risks. KBW’s Andrew Stimpson says the prospect of continued outperformance is founded on a much improved earnings profile and valuation multiples that remain below long-term norms.

Here are five charts that illustrate a historic first half for European banks:

Societe Generale Leads Gains

Societe Generale SA has surged 79% since the start of the year and is trading near its 2017-high as Chief Executive Officer Slawomir Krupa’s turnaround plan for the French bank gains traction. Since taking office two years ago, he has focused on exiting non-core businesses, boosting the balance sheet, lifting profitability targets and shareholder payouts.

Banco Santander analysts have SocGen as their preferred French bank, citing its potential to surprise on the upside, helped by cost-cutting efforts, they said in June.

Commerzbank Surpasses €30 Billion

Also among top-performing bank stocks this year is German lender Commerzbank, whose market capitalization surpassed €30 billion ($35.3 billion) for the first time in May. Its multi-year rally has been fueled by earnings strength and takeover interest.

Its share price has more than doubled since UniCredit took a stake in September and raised the possibility of a full-blown merger. Still, that move was effectively ruled out by the Italian lender’s Chief Executive Officer Andrea Orcel in June, saying such a move would not add value given the stock’s rally.

Spanish Banks Keep Shining

Spanish lenders, which had rallied on the back of higher interest rates, have sustained gains through the European Central Bank’s cutting cycle on robust earnings, fee-generating businesses and M&A deals.

Banco Santander, which has jumped 57% since the start of the year, has surpassed UBS as the biggest bank in continental Europe by market value. Elsewhere, BBVA SA plans to stick with its bid for smaller peer Banco Sabadell SA, after the Spanish government delayed a potential merger.

Deutsche Bank’s German Boost

Deutsche Bank AG shares have climbed 51% so far this year and are trading around 2015 levels, as the German lender has boosted payouts to shareholders and is set to benefit from the impact of massive government fiscal stimulus in its home country.

The firm has made increasing payouts a key element of its strategy as Chief Executive Officer Christian Sewing seeks to lift the share price. Still, concerns over a recent capital ratio disclosure pressured the stock on Monday.

Italian Banks Are All About M&A

Italian lenders are currently in a deal wave that is set to reshape the country’s finance industry. After cleaning up their balance sheets, some firms are turning their sights on takeovers again as surging profits from higher interest rates lifted share prices.

UniCredit is among Europe’s best performers this year, up 48% as it pursues Italian peer Banco BPM SpA while doubling its stake in a Greek lender. Its market capitalization exceeded that of rival Intesa Sanpaolo SpA in May to make it Italy’s largest bank by that metric. Peers Mediobanca SpA and Banca Generali SpA have recently hit fresh record highs.

—With assistance from Julien Ponthus.