JPMorgan’s senior analyst Kian Abouhossein has outlined his preferred European bank stocks as investors look ahead to 2026.
Despite macroeconomic uncertainty and uneven M&A activity across the sector, Abouhossein believes select names offer compelling value and strong returns.
In a recent CNBC interview, Abouhossein said Barclays, UBS, and NatWest stand out on his list, supported by attractive valuations, disciplined cost measures, and robust profitability.
While Swedish banks, for the most part, appear less appealing due to high premiums and limited growth, these three institutions are seen as well‑positioned to deliver shareholder value in the years ahead.
Barclays Plc (LON: BARC)
Barclays’ stock is one of JPMorgan’s top picks, with Abouhossein highlighting its cheap valuation relative to peers.
“BARC is trading at about seven times earnings, one of the cheapest stocks,” he noted, contrasting it with Goldman Sachs at 15 times.
While the UK macro backdrop remains controversial, Abouhossein believes the discount applied to these British investment banks is excessive.
He argues that Barclays has improved operating leverage and cleaned up its operations since the global financial crisis, making its current valuation too low to ignore.
For investors, BARC shares offer a rare combination of resilience and upside, positioning them as a standout value play heading into 2026. Note that the bank stock currently pays a 2.16% dividend yield as well.
UBS Group (SWX: UBSG)
UBS shares also earn a spot on JPM’s preferred list – thanks to its cost discipline and investment banking strength.
Abouhossein pointed out that “we still like some of the IB plays and they have some good cost measures, such as UBS.”
The Swiss bank has kept cost growth contained at 2-3%, far below the 5-10% increases seen among US peers. This discipline allows UBS to maintain profitability while investing selectively in digital initiatives.
Its global investment banking franchise remains competitive, and the firm’s balance sheet strength adds further appeal.
For investors, UBS stock represents a well‑managed institution capable of delivering consistent returns in a challenging macro environment. It also currently pays a 2.47% dividend yield.
NatWest Group (NYSE: NWG)
NatWest stock rounds out JPM’s top picks, with Abouhossein praising its strong retail banking model in the UK.
“NatWest, a pure retail bank in the UK making 18% returns, a very healthy environment,” he said.
The bank’s focus on retail operations has allowed it to generate impressive profitability, supported by disciplined cost control and a favourable domestic market.
Despite broader concerns about the UK economy, NWG’s ability to deliver double‑digit returns on equity makes it a compelling choice for investors seeking stability and income.
With its strong capital position and consistent performance, NatWest is viewed as a reliable stock to own heading into 2026 – especially since it pays a rather lucrative dividend yield of 4.26%.
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