European banks trade at 32% discount to Stoxx 600, Tikehau Capital says
XLF•Tikehau Capital said European banks traded at 11.5 times earnings versus 16.8 times for the Stoxx 600, a 32% discount. The European banking index rose 16.64% year-to-date, while subordinated financial debt issuance reached €81.9 billion through September.
1. Valuation and performance
Tikehau Capital’s October 2026 analysis said European banks had reached their highest profitability since 2008, supported by strong capital buffers and low non-performing loan ratios. Banks traded at 11.5 times earnings, compared with 16.8 times for the Stoxx 600, a 32% discount. The European banking index rose 16.64% year-to-date, compared with 0.81% for its US counterpart.
2. Debt issuance and selectivity
Subordinated financial debt issuance totaled €81.9 billion through September, above the five-year average of €74.4 billion. Tighter spreads prompted greater credit selectivity, with Tikehau favoring existing euro-denominated Additional Tier 1 bonds with high coupons and defensive Tier 2 opportunities.
