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WALL STREET BANKS SIGNAL UPSIDE FOR EUROPEAN IBS

Strong second-quarter results from Wall Street banks are boosting hopes for Europe's investment banks ahead of their own earnings season.

J.P. Morgan says trading revenue and investment banking fees at U.S. lenders came in well above expectations, while management commentary pointed to a healthy deal pipeline as activity remains supported.

That matters for European peers because they remain much cheaper. The broker notes that Goldman Sachs GS.N and Morgan Stanley MS.N trade on around 15 times 2028 earnings, compared with an average 8.5 times for European investment banks.

"For European IBs, we see potential for re-rating and positive consensus EPS revisions," writes JPM's co-head of global bank research, Kian Abouhossein.

He sticks to his positive sector stance despite an expected slowdown in the second half, saying market uncertainty will keep feeding into trading income and the IB pipelines remains intact.

BNP Paribas BNPP.PA kicks off the season with results on Thursday, followed next week by Barclays BARC.L on July 28, UBS UBSG.S and Deutsche Bank DBKGn.DE on July 29.

(Danilo Masoni)

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