Europe's banks are expected to have a better year than their U.S. counterparts, with the KBW Bank Index predicted to return less than 1% this year, while the Stoxx 600 Bank Index is forecast to return more than 22%, making it its second-best year since 2012. This 21-point gap is the largest for expected returns at the beginning of a year since 2005. Analysts view banks in Europe as undervalued, and a consensus is forming that the Bank of England and European Central Bank will cut rates in the second quarter, with robust earnings anticipated. JPMorgan and Wells Fargo reported record profits in Q3, but banks face pressures like slower loan growth and rising debt defaults. The KBW Index ended 2023 high but 34% lower than January 2022. America's largest banks prepare to report a spike in bad loans, with non-performing loans projected to reach $24.4 billion for the four largest banks, an increase of nearly $6 billion since the end of 2022.