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MAPFRE AM is more optimistic about banking sector

Jun 15, 2021

Redacción Mapfre

Redacción Mapfre

The banking sector is experiencing a very positive year after suffering the effects of the pandemic in 2020. With considerably high growth expectations, Cristina Benito, head of equities at MAPFRE AM, points out that this bullish view on banks is primarily due to the improved economic outlook, as well as the estimated earnings for banks.

She noted that, after the publication of 2020 results, "the earnings momentum of the banking sector improved substantially", and for this year "the analysts' consensus is for significant reductions in the cost of risk".

Cristina also points to the resumption of dividends as another key factor in the optimistic outlook for the sector. According to an article in Bloomberg, the expert recognizes that the collection of such dividends is being limited by the restrictions imposed by the ECB, although she expects them to be lifted in September: "After the removal of the restrictions, it’s expected that banks will return to their shareholder remuneration policies, offering dividend yields that are estimated at around 5-6 percent," she adds.

Last but not least, she added that in addition to the good stock market performance so far this year (the STOXX 600 Banks has risen by 28 percent), "the sector continues to offer attractive valuations" for investors.

Inflation will condition the ECB's movements

Inflation will condition the ECB's movements

Inflation in the eurozone, despite the notable decline seen since peaking in 2022, continues to fall less quickly than the European Central Bank (ECB) would like. After learning yesterday that inflation in Europe was 2.5% in June, Alberto Matellán, chief economist at MAPFRE Inversión, explained that this level, although “reasonable,” will continue to limit the ECB as far as future interest rate cuts go.

French election puts pressure on European fixed income

French election puts pressure on European fixed income

The European fixed income market has seen an upward movement in the last month largely due to the economic and political uncertainty in France. This follows President Emmanuel Macron's call for elections, which were won in the first round by Marine Le Pen's party, explained MAPFRE AM's Fixed Income Manager, David Iturralde, on Radio Intereconomía.

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