Europe’s banking sector is continuing to impress, with year-on-year earnings growth reaching an impressive 23%. This momentum has been driven by a combination of factors, including elevated net interest income, low credit costs, and rising fee income. These positive trends have contributed to the sector’s robust capital and liquidity positions, making banks a preferred pick among investors.

According to a recent report by Societe Generale, only 8% of financial companies are missing consensus estimates, highlighting the sector’s strong performance. The report also noted that the chart below, which shows the SX7E, has reversed higher every time it dipped below the 21-day moving average since the latest melt-up began.

While there are some challenges ahead for the banking sector, including increased competition and regulatory scrutiny, the current trends suggest that banks will continue to perform well in the near term. As a result, investors may want to consider adding exposure to this sector to their portfolios.