Analysis-Old meets new economy: AI boom to supercharge European banks' rally

FILE PHOTO: A view shows the headquarters of Societe Generale in the financial district of La Defense in Puteaux near Paris, France, October 23, 2021. REUTERS/Sarah Meyssonnier/File Photo

LONDON, Dec 15 (Reuters) - After a stellar 2025, investors expect shares in European banks to keep heading higher in 2026, supported by strong earnings and, crucially, cost savings stemming from artificial intelligence.

As fears of a recession and interest rate cuts from the European Central Bank have subsided, investors have turned even more positive towards European banks, revising up their expectations for the sector, despite a complicated backdrop.