UBS Equity Preference List European Financials 2026 08 19

19 August 2026, 09:48 UTC Chief Investment Office GWM Investment Research

European Financials Equity preferences

The European Financials Equity Preference list (EPL) is a list of our highest conviction European Financials stocks. Sacha Holderegger UBS Switzerland AG Trading at approximately 11x 2027 earnings, the European financials sector appears attractively valued relative to the broader market. The sector also offers Please see important disclaimers and a compelling shareholder return profile, with a dividend yield of around 5% and disclosures at the end of this additional support from ongoing share buyback programs this year. We rate document. European banks as Attractive and remain Neutral on European insurers and diversified financials. European banks are particularly well positioned for a cyclical expansion, supported by solid loan demand, elevated capital markets activity, a stable interest rate environment, and valuations that remain reasonable despite the significant improvement in profitability. Our Top Picks: 1) banks: ABN Amro, Banco Santander, Barclays, 2) insurers: Allianz, Generali

Latest Changes: We updated our top picks for insurers, switching out AXA for Allianz

Benchmark: MSCI Europe Financials

Most Preferred Company Changes* Currency Weight

3I GROUP PLC GBP 6.0% ABN AMRO EUR 6.0% Allianz S.E EUR 7.0% AXA EUR 6.0% Barclays GBP 8.0% FinecoBank S.P.A EUR 6.0% Generali EUR 5.0% HSBC plc GBP 10.0% Julius Baer Group CHF 6.0% Lloyds Banking Group GBP 6.0% Raiffeisen Bank Intl EUR 6.0% Santander EUR 12.0% Société Générale EUR 10.0% Standard Chartered plc GBP 6.0%

Source: UBS, Consider potential trading restrictions, all figures are rounded *Changes since the last publication

Positioning and key trends We have a preference for banks over insurance and diversified financials, reflecting stronger earnings momentum, more compelling valuation support, and greater scope for rerating. Banks continue to benefit from resilient net interest income, robust fee and trading trends, and a benign credit environment, while diversified financials offer cyclical upside from a recovery in capital markets. By contrast,

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while insurance retains defensive qualities, we see less scope for positive earnings surprises and a more challenging pricing and margin backdrop across several sub- segments.

Banks We remain constructive on European banks, supported by solid recent earnings delivery and continued positive revisions. 2Q26 was another strong quarter, with the majority of banks beating expectations, driven by resilient net interest income, upside in fees, and robust trading revenues. Looking ahead, we expect earnings momentum to remain supportive, underpinned by a favorable macro backdrop, disciplined cost control, and still-benign asset quality, with only modest normalization in the cost of risk. Strong capital levels should continue to support attractive shareholder distributions, while valuations are not expensive, especially compared to the broader market.

Insurance The sector continues to offer defensive characteristics, including strong balance sheets, earnings visibility, and attractive capital returns. However, we see fading earnings momentum as pricing in property and casualty (P&C) decelerates and margins begin to normalize from peak levels. While life insurance fundamentals are improving, supported by solid flows and pension risk transfer activity, broader sector upside appears constrained given limited scope for earnings or dividend surprises. Reinsurance pricing has likely peaked and is softening, while commercial lines are seeing increasing competitive pressure. As a result, we see limited rerating potential relative to other financials.

Diversified Financials A recovery in capital markets activity and improving investor risk appetite should provide a supportive backdrop, particularly for exchanges and retail platforms. Within asset management, we remain selective.

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