Morgan Stanley joins JPMorgan and Goldman Sachs in raising outlook for European banks

A team of Morgan Stanley analysts, led by Alvaro Serrano, has upgraded its outlook for European banks. The experts believe EU financial institutions still have upside potential, even after rallying to a 17-year high.

The Stoxx 600 index has shown some of the most impressive results, surging by 31% since early 2025. Such a jump was driven by the EU’s revised budget policy, strong earnings from national companies, and potential M&A activity in the sector, Morgan Stanley reports.

According to Serrano, European banks could grow by another 15%, narrowing their valuation gap with the US counterparts. JPMorgan Chase & Co. and Goldman Sachs Group Inc. have also expressed optimism about the region’s financial sector.

Morgan Stanley considers Commerzbank AG, Lloyds Banking Group Plc., Banco Santander SA, and Societe Generale SA to be the most attractive banks for investment.