Gavekal Capital: More on European Banks: Italy

Tuesday, November 19, 2013

More on European Banks: Italy

Following in Spanish banks' footsteps, the Italian Banking Association announced a 23%yoy increase in non-performing loans in the month of September.  The total of about €145 billion accounts for nearly 7.5% of lending (up from just under 6% in the same month last year).

In spite of this negative fundamental attribute, the stock price performance of the four Italian Diversified Banks that are included in the MSCI World Index has been strong over the last year:

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Meanwhile, sales and earnings estimates are generally positive and increasing:

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And valuations are not too wild:

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It remains to be seen whether recent constructive/ less negative patterns in our point-and-figure charts can hold and/or improve:

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