Bargain valuations

12 months forward Price-to-Earnings ratio of European banks has reached a low of 6.5 times, clearly a crisis level as during the Covid-19, the sovereign debt or the 2008 financial crisis. After the trouble with regional banks in the US and the disappearance of Credit Suisse over only one weekend, the stress amongst investors remains clearly felt. We believe there are however now banks with solid business models trading at bargain valuations without having seen a run on deposits. One example is our holding BAWAG: this Austrian lender trades at 5.5 times forward earnings with an estimated return on equity of 17.1%. If history is any guide and you share our belief that the banking sector is not about to fall apart, it seems to be a good moment to seize investment opportunities in the sector.