EU Banks Set to Extend Best Rally Since ‘97, Says Morgan Stanley

Euro-area banks are set to extend their best rally in 28 years as they benefit from loan growth and higher fees amid a stronger economy, according to Morgan Stanley analysts.

The bank sees a 17% to 22% gain for Euro Stoxx Banks Index in the next 12 months, building on this year’s 61% rally. The analysts also cited “healthy” deposit growth and the likelihood for loan growth to double in 2026.