Citi to Continue to Be Overweight on Banks in 2026

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00:00What is the key driver that means you stay constructive on Europe?

00:03Good morning. Yes, this comes from our 2026 outlook that has just been published this morning.

00:11And the constructive view is based on really many things coming together into the next year,

00:17positive triggers, right? So number one, we are having a more resilient global economic growth.

00:24It's been very resilient this year, despite the headwinds. We think it's going to remain

00:29this way into the next year. There is some softness out of the U.S. labor market.

00:33That means the Fed will underpin this constructive outlook with the cuts.

00:38We think they are going to cut three times. And then domestically in Europe,

00:42we are going to have expansionary fiscal policy finally next year.

00:46This year it hasn't been expansionary yet. It's been restrictive.

00:50So we are going to see some of this expansion feeding through into the data.

00:55And let's not forget that the ECB easing cycle that, of course, has come to an end a few months ago,

01:01the effects of that easing will only come through into the economy next year.

01:06And we are already seeing it in the outlook for EPS and outlook for broader set of sectors.

01:11Are the banks going to deliver again next year? Because that appears to be crucial.

01:17Absolutely. So perhaps you won't have a repetition of such a concentration of

01:22and dispersion in terms of sectors performance that one sector is up 50 percent and everything else at least half behind.

01:32But given this macroeconomic backdrop I've described, this is a very good backdrop for banks to continue to do well.

01:41Right. And then add to that actually perhaps some sentiment from the corporates picking up sentiment from the consumer picking up.

01:50It's a very good backdrop. So we continue. We've been overweight banks.

01:53We continue to be overweight banks into the next year.

01:57But we also couple it with the sectors that will be beneficiaries of this industrial revival,

02:06of the fiscal and of secular themes that are going in the economy.

02:10So today we've upgraded industrials to overweight. We've upgraded basic resources to overweight.

02:16So it broadens out.

02:17So it broadens out, yes.

02:18So let's go ahead.

02:36So let's go ahead.