Morgan Stanley shows preference for Lloyds among UK listed lenders

"While the interest rates continue to be low, with uncertainty on lower bound gone, our confidence in earnings expectations bottoming in 2H19 has grown," they said.

Nonetheless, they were not anticipating much growth, they conceded, with earnings seen ahead by roughly only 1.0% over the following two years, although the potential existed for lenders to "recalibrate" their business models given the "shallow" credit cycle.

They added another caveat: "We are also mindful of the key regulatory impacts to come."

On a more positive, they highlighted five key themes for the group, including: "No more deposit rate cuts, steeper European [interest rate] curves, sequential macro stabilization across the continent are all positives for the bank stocks; interest rate and credit cycles line up into 2020; support from outsized, steady cash returns; and bottoming valuations.

In particular, they highlighted Santander, Unicredit and Lloyds (Overweight, target price: 72.0p) among their most preferred issues in the sector.

Within the same research note, Barclays (target price: 200.0p), RBS (target price: 260.0p), and Virgin Money (target price: 180.0p) were all at 'equalweight'.