Global banks transition back to risk-on
The bull case for global banks is that a top-down regulatory and political shift toward economic growth is encouraging banks to resume lending and risk-taking.
The argument
The guest argued that banks have been under-allocated and highly capitalized for a decade. He pointed to emerging loan growth in Japan and Europe as evidence that banks are finally 'coming to the party' to support economic growth.
The thesis, stress-tested
✓ What validates it
- ✓Continued mid-to-high single-digit loan book growth in Europe and Japan
- ✓Bank valuations re-rating from 8x earnings toward historical averages of 12x
▸ Risks discussed
- ▸Unexpected spike in loan losses or non-performing loans
- ▸Reversal of the regulatory shift back toward stricter capital requirements
Hear it yourself
"It's happening in Japan, and it's happening in The US. And this is another reason I'm bullish on growth is because, like, we have been growing. The banks are now coming to the party. And I'm seeing loan growth."
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