Capturing European banks' improving fundamentals

Strong capital ratios despite challenging share prices

As the spread of Covid-19 has caused an unprecedented shutdown of global economic activity, investors are faced with heightened uncertainty and as a result yields across risk assets have moved materially higher in 2020.

During this period, central banks have expanded their toolkits including unprecedented fiscal stimulus packages with the aim of supporting the economy as companies and individuals face challenging times. With government bond yields generally falling and yields in risk assets rising, the amount of negative yielding debt outstanding has fallen to $8.9trn. Among the current backdrop, investors may consider searching for income in sectors that offer an attractive yield and demonstrate improving fundamentals. Central bank policy and the low interest rates experienced in recent years has...