Spring chaos once again This is our attempt to offer a helping hand. Trying to pin down the earnings risk We keep it short: in our update last week we already explained why the fundamental case for banks remains intact. But whilst the appeal of the sector in the medium to long-term remains, the question of the hour is a rather different one: what if things go against the banks and retaliatory tariffs realise recession fears? This note is trying to pin down the earnings risk - for the sector and single stocks. 10-20% sector earnings downside in a range of scenarios, from ''realistic'' to ''severe'' We think there are two main debates in the room. If we slide into a recession, will the benign asset quality environment continue or are we reaching its end? What if rates come down further than expected? We check in with our proprietary cost of risk and X-NIM models and squeeze earnings for different sensitivities, cutting IB banking fees in half - but neglect mitigating factors. 10-20% of 2027e earnings could be at risk, but the impact varies widely across our coverage. Our playbook remains unchanged Our stock picking preferences are reinforced in the current environment: highly profitable retail banks with a domestic focus, strong franchises and competitive distributions do not just help block out the noise, but as we show here, also limit your earnings downside. UniCredit comes out on top in both scenarios, but most of our other top picks, Lloyds, Nordea, Commerzbank and BCP, also screen favourably in an environment with a heightened cost of risk and a 50-100bps rates shock.