Nie je k dispozícii v slovenčine.
Riccardo Meli
- 27 May 2026
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 1, 2026Details
- Abstract
- Following more than a decade of persistently depressed valuations, euro area banks’ price-to-book (P/B) ratios have been on an upward curve since late 2022, with the most pronounced rise seen during 2025. The 2025 surge has raised questions about the sustainability of high valuations going forward and the risks for financial stability. This box investigates the main drivers behind the marked increase in euro area bank valuations and the factors explaining the remaining gap with US banks. Using a Vector Error Correction Model (VECM), the analysis decomposes P/B ratios into macroeconomic, bank-specific and market factors. It finds that higher short-term interest rates (via restored deposit franchise values), improved bank profitability and elevated payout ratios (dividends and share buybacks) were the primary drivers of the 2022-25 increase. The remaining valuation gap with US banks stems mainly from weaker euro area macroeconomic conditions rather than bank fundamentals. While valuations appear broadly aligned with fundamentals, they remain vulnerable to negative growth surprises or rising risk premia.
- JEL Code
- G21, G12, E44 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages