EUROPEAN BANKS: The ECB published the July 2016 (Q2) Bank Lending Survey (BLS) indicating further improvement in loan supply conditions for loans to enterprises and households. A positive is continued increase in loan demand for both corporate and retail. Key negative is margin, -21% for mortgages and -31% for corporates for Euro area and saw deterioration in all major countries. In addition, we argue, there has been limited positive effects from TLTRO II. We remain selective and look at EU banks along the lines of (i) weak/strong capital, (ii) weak/strong economy and (iii) EU/non-EU exposure.