The second half of the financial year is always more interesting for companies and investors. Invoices are paid, shareholders have bagged the second round of dividends and profit forecasts come home to roost.
- Dominant presence in home market
- Foothold in South American economies
- Generous dividends and buybacks
- Attractive versus US banks
- Eurozone on a rate-cutting cycle
- Sector has a chequered history
Investors who stuck with the unlikely combination of 'tanks and banks' which, prior to the Russia-Ukraine war and the rise in interest rates, would not have won any popularity contests, are enjoying a champagne year so far. While defence stocks show no sign of waning, however, the great bank recovery is being met with growing scepticism. Arguably, though, there is still enough momentum left in banking shares, helped by the 'higher-for-longer' interest rate environment, hedging against rate cuts and share buybacks, for investors to shop around for a strong candidate with which to finish 2024.