Financials
Our Sector
The STOXX 600 European Financials Sector, consisting of 50 banks (SX7P), 31 insurers (SXIP) and 38 diversified financials (SXFP) encapsulates the majority of themes driving world stock markets: Interest rates and inflation, credit cycles, sovereign risk, technology (FinTech) and commodities. Relative performance to the STOXX 600 since the dotcom bust underscores the appeal and versatility of specialist knowledge of these three critical subsectors.
Market Update – September 2025
European banks’ 40% YTD outperformance (TSR) of the wider market reflects higher-for-longer rates and a stream of EPS upgrades after a solid 1H reporting season. As the focus switches to the turn in the credit cycle, and associated IFRS9 adjustments and provision hikes, the momentum for upgrades will slow but relative EPS momentum versus other sectors remains appealing.
Further outperformance will be predicated on earnings upgrades and a rerating. With the sector back at 17-year relative highs, we are increasingly focused on pair-trades within the sector, and intra-sector rotation, as absolute valuations are at fair-value. From a relative PE perspective, the re-rating from a 55% discount in early 2024 to the current 35% discount suggests that much of the easy money has now been made, with a 30% discount a level at which the banks would no longer retain their relative appeal.
Our Financials Team
Jonathan Tyce
Founder and CEO, Banks
30 years covering financials as Buyside, Hedge Fund and Sellside including JO Hambro, Fox-Pitt Kelton, American Express Asset Management and Bloomberg Intelligence. Jonathan is our lead on the banks.
Phill Haggard
Insurance
35+ years in financials, spec sales sell-side, KBW, Merrill Lynch, Phil is our resident insurance specialist and lead on a couple of the Alpha capture programs
Richard Wynne-Griffith
Specialist Sales
35+ years in financials, Richard was latterly Head of Sales at both KBW and Fox-Pitt Kelton. His network, market experience and context across the financials space provides invaluable context
Our Approach
As sector specialists, we aim to articulate the various attractions and risks discounted into the sub-sectors of European banks, European insurance and European diversified financials. Set against the context of the wider market – in this case the STOXX Europe 600 – we are also benchmark aware and incorporate the relative growth and outlook of our specialist sectors versus the wider market for context and weighting assessment.
Our four primary strategies to generate alpha are:
1.
Absolute longs or shorts, with idiosyncratic drivers and catalysts that render a hedge unnecessary or redundant.
2.
Stock pair trades – e.g. Italian banks vs. Swedish banks, or long-short in a particular country or special sit.
3.
Sector relative single name ideas with clear catalysts and valuation rationale.
4.
Sub-sector relative or rotational trades – e.g insurers vs. banks, M&A prey vs. predators.
Our Product
A wealth of experience, combined with the flexibility in approach, ability to cherry-pick best ideas and avoid stale coverage models. Services include a regular flow of value-add ‘Sales Desk’ and analytical commentary; generation of money-making, actionable investment ideas; direct access to specialist sales (scheduled calls /emails). We can help investors contextualise the financials sector vs. shifting macro- and market environments.