European Banks Rally Has Further to Go, JPMorgan Analysts Say

European bank shares have room to extend this year’s 27% rally as they reap the benefits of interest rates staying elevated, JPMorgan Chase & Co. analysts said.

Germany’s multi-billion euros defense and infrastructure splurge will keep European interest rates high, which will benefit lenders, analysts led by Kian Abouhossein wrote in a note Tuesday. The risk of the European Central Bank cutting rates below 1.5% has receded, allowing banks to generate more net interest income, they said.