European Equity
Access European-domiciled local and multinational companies.
Quality Growth Banks: Why We Find the U.S. a Better Hunting Ground Than Europe
Quality Growth Boutique
In this Viewpoints paper, Igor Krutov, Director of Research, explains why most European banks suffer from structurally poor profitability. Even “average” U.S. regional banks are earning ROTEs (returns on tangible equity) in the mid-teens, something most European banks can only dream of.
Some argue that when interest rates (eventually) go up in Europe, banks there will enjoy a net-interest-margin expansion that will close most of the ROTE gap with their U.S. peers. We disagree. We believe the underlying cause of poor profitability is fierce competition, not low rates. We expect that in overbanked markets, the initial improvement in net interest margins from higher rates will be ultimately passed on to the banks’ customers.
About the author
About the author
Topics:
Related insights
Quality Growth Boutique
From waistlines to bottom lines – investment implications of weight-loss drugs
We believe answers to critical questions about weight loss drugs will help determine the sustainability of success that some pharmaceutical stocks have enjoyed: How many people will be on the drug, and at what price? Which pharma company will be the winner of the R&D race?
Quality Growth Boutique
A wolf in sheep’s clothing: equity risk in a changing market environment
As the landscape shifts, investors may now be exposed to risks that were previously disguised by a prolonged era of accommodative monetary policy. Today, it pays to be wary. A focus on quality can protect in a downturn and provide a smoother ride through the cycle.
Quality Growth Boutique
2024 Global Equity Outlook: Soldiering On
Legendary investor Charlie Munger, who recently passed away, followed a simple philosophy of “soldiering on” – persevering through challenging times while also knowing when to seize opportunities. Munger’s wisdom guides us as we manage key risks and seek to find opportunities in 2024.
Quality Growth Boutique
In times of panic, investors need a dose of healthy optimism
How can you find growth in times of panic? Difficult markets are not to be feared. Investors need an optimistic resolve and a clear roadmap: identify businesses with sustainable and predictable earnings streams, pricing power, and lower leverage, and avoid stocks trading at exorbitant multiples that are vulnerable to higher discount rates.
Quality Growth Boutique
Quality Growth: The last man standing
Like the end of a long evening of revelry, the decline in the fortunes of momentum growth and value companies leaves the Quality Growth investors, in our opinion – still standing. Companies with pricing power, low debt, and consistent earnings may be the slow but steady winners in the race to beat the market.
Quality Growth Boutique
Cloudy with a Chance of a Bear Market
Bear markets do not send advance warnings. But investors can pay attention to red flags. Valuation multiples are well above the long-term average and consensus estimates are bullish on earnings growth. The good news is that investors can prepare for macro uncertainty and minimize capital loss.