European Banks NII tracker: May CB data: NFC credit ticking up?

Research evidence excerpt

European Banks NII tracker: May CB data: NFC credit ticking up?

Global Research

6 July 2026ab

European Banks NII tracker Equities

Europe including UKMay CB data: NFC credit ticking up?

Banks

Ignacio Cerezo

May CB data - NFC credit ticking up? Analyst

As has been the case for some time now, May Central Bank figures portray stability, with ignacio.cerezo@ubs.com

our reading of the data having a moderately positive skew due to (i) signs of corporate +44-20-7568 4409

loan growth reactivation (including in laggards like France and to a lower degree Alvaro Fernandez-Garayzabal

Germany), consistent with UBS economists' recent Capex survey and (ii) another month Analyst

with no sizable pricing/competition pressures emerging. The two other factors we alvaro.fernandez-garayzabal@ubs.com

normally triangulate around to gauge upside/downside NII risks (rate developments and +34-91-436 9622

consensus expectations) remain broadly unchanged and generally favourable, though it Johan Ekblom, CFA

is probably fair noting the rate debate has somehow taken a dovish turn since our last Analyst

tracker edition, with the possibility of a third 25bp hike this year now trending lower, johan.ekblom@ubs.com

which we believe also validates the need to remain cautious about the sustainability of +44-20-7568 3580

recent hikes beyond YE27E. With the sector's cyclical nature driving a strong c10% Jason Napier, CFA

move post US/Iran ceasefire, valuation is back to 10x PE27E, a "ceiling" investors Analyst

appeared ready to "breach" pre-conflict. With bottom up trends remaining supportive jason.napier@ubs.com

but the magnitude of EPS revisions necessarily smaller than in the past, the outcome of +44-20-7568 5037

that valuation debate likely remains the main driver of European banks' shares.