Although Trump's election as US president has had a negative impact on Spanish banks, we can say that at the moment, banking is living a golden moment. The arrival of Trump foresees a horizon of uncertainties with possible instability in trade policies and the fear of an increase in interest rates in the US derived from a future expansive fiscal policy that could strengthen the dollar against the euro. A strong dollar and less favorable policies for the European Union would be an additional challenge for Eurozone banks.

The Eurozone is currently home to 47 banks with a market capitalization of more than one billion euros. At the top of the list is the Italian bank Intesa San Paolo, with a capitalization of 72.907 billion euros (M€), closely followed by the Spanish giant Santander, with 70.878 billion euros. However, these stocks are still far behind the international heavyweights: the US investment bank JP Morgan has a capitalization of €582.028 billion, Bank of America with €299.824 billion, and the Chinese Industrial and Commercial Bank of China with €268.346 billion. Taking into account the importance of the banking sector in the Eurozone given the lack of a single capital market, it would be desirable to study how regulation, supervision, consumer protection, legal costs and other factors are affecting the value of our banks.

Analyzing the results of the third quarter, the status of Eurozone banks is encouraging. The annualized Return on Equity (ROE) average is 14.7% in banks with capitalization over €1 billion, with more than 50% of these entities exceeding 15.2%. Spanish banks have had a good quarter: BBVA leads with 19.2%, followed by Bankinter (18.3%), Caixabank (17.4%), Sabadell (14%), Santander (13.8%) and Unicaja (9.3%).

As regards the generation of shareholder value, estimating the difference between ROE and the required return for shareholders (Cost of Equity), BBVA stands out at European level. On the database, Capital IQ, would show an annual generation of value for its shareholders of 4,684 M€ taking into account a required return of 12%, which is high, since, for example, Aswath Damodaran's website shows a required return of 6% in the year 2024 for regional banks in the United States. The required return is an estimate, and depends on many factors. The more risk factors that are incorporated into model to estimate the required return the better the return, provided that the factors adequately capture risk. Traditionally, the Fama-French (1993) three-factormodel and other additional factors have been used for non-financial companies, but the aforementioned model did not incorporate financial companies for its estimation since their level of leverage is very different from the rest of the industries, so it seems more reasonable to add factors specific to the banking industry for its estimation.

In terms of credit risk, the level of non-performing loans in the Eurozone varies between 0.42% and 6.75%, with an average of 2.5%. This suggests a stable and not worrisome status . The Price-to-Book ratio also sample shows signs of improvement, with a average of 0.87, as the market is rewarding the banks' dividend policy. Banks are companies with very mature businesses and are attractive to investors as long as they offer interesting remunerations.

Among the Eurozone banks, Santander stands out with the highest quarterly profit, reaching €3,250 million, followed by BNP Paribas with €2,868 million and BBVA with €2,628 million.

Despite the positive outlook, interest income is expected to decline in the coming quarters due to the recent interest rate cuts in June, September and October. In addition, Trump's coming to power also brings, as we said at the beginning, some storm clouds on the horizon.

Although in a solid position at present, the Spanish banking sector faces the need to manage its business in an environment of high uncertainty. However, its currentstatus is good enough to allow it to anticipate possible obstacles that may arise and the Trump effect may be, in part, a market overreaction to the uncertainty generated in Europe, and particularly, in Spain.