Banks are going through their best period in history. All the big banks announced profits which were better than expected while in several cases they were much higher than the estimates causing a sharp rise in the banks’ stocks. There are many banks that have increased or are expected to increase the dividend they distribute, in an effort to stimulate investment interest.
However, the most important clue comes from elsewhere and is none other than repurchases of own equity. Since the end of 2020, this practice has been allowed again for banks, with the result that repurchases of own shares are intensifying month by month. Between August 9-13 alone, banks bought $ 1.26 billion worth of treasury shares and are expected to continue with unabated intensity. No other sector carries out more intense share buyback programs.
According to a report by BofA, a study of similar data from 2020, leads to the conclusion that banks have a strong chance of outperforming all other sectors in the coming months. The XSpot Growth portfolio is expected to benefit from this development as it has a direct exposure to the banking sector through the relevant ETF, as well as an indirect exposure to the banking sector through the Value ETF (VTV).