STOCKS | JPMorgan: Strong Wall Street Bank Results Lift Outlook for European Investment Banks

Wall Street large banks delivered strong second-quarter results, lifting market optimism for the upcoming earnings season at European investment banks. According to Jin10, JPMorgan said U.S. banking trading businesses and investment banking fee income both far exceeded market expectations, while management comments also showed ample reserves for mergers, acquisitions, and financing deals, with overall activity continuing to receive support. JPMorgan said this matters for European peers because European investment bank valuations remain significantly low. It noted that Goldman Sachs and Morgan Stanley trade at about 15 times expected 2028 earnings, while the average valuation for European investment banks is only about 8.5 times. Kian Abouhossein, co-head of global banking research at JPMorgan, said European investment bank valuations have room to re-rate and EPS expectations may be raised. He still kept a bullish view on the sector despite expecting business activity to slow in the second half, saying market uncertainty will continue to support trading revenue and that investment banking pipeline reserves remain solid.