Hi Sam, my outlook for banks shifted a little lately: more and more institutions (central banks, multinationals, small firms, etc.) and private persons all started a war against credit. And this will bring slower growth for banks, more competition for getting lucrative credit business, and will cut into the earnings growth I expected.
The signs of serious efforts for credit repaying, and avoiding further loans, saving etc. are everywhere. And it is deflationary. The FED, the ECB, India, China, states, municipalities, etc. are all getting more and more conservative. This might be a short 1-2 year respite before expanding again. But maybe this is a longer term behavoir, as they all tend to herd. In 2008-09 the US subprime crisis started a major meltdown, costing $1.0T bailout. In 2011 the Greek, Irish, Portugese loss of competitivness in 10 years compared to germans created the current EU crisis; they feel the euro overvalued, while the core countries feel it undervalued. Those who are less competitive, cannot adjust the value of money, so they must get more credit to survive (or year after year tighten on the austerity measures, which they cannot do.) But the EU just does not have the fiscal infrastructure to handle this kind of crisis at all, not to mention efficiently. They cannot doctor the real problem, the growing competitivness differences. Sooner or later they must cut the EU into 2 or more currency regimes.
And still, I think the Core EU coutry's banks will do just fine, like ING, UBS, DB. They will survive the split in the euro region. And will prosper, just might take a little more time.
On NBG: if the greeks drop the euro and introduce the drachma again, they will still need banks, and still need to finance the Greek state. And nobody will accept a spit (the greeks and the EU) if their banks might get bankrupt. Why? A banksupt state nationalizing banks, simply will lead to communism in short order. Nobody wants the consequences of a major bank panic. So, I still trust the EU will solve the problem, and my NBG shares will be worth 5 times more in 3-4 years.