Buoyed by confidence that low interest rates are helping to boost bank earnings, Morgan Stanley is sticking to its bullish stance on groups such as Credit Suisse, Julius Baer, Nordea,and Banco Bilbao Vizcaya Argentaria.

Morgan Stanley said early indications from the second-quarter bank reporting season showed that government stimulus packages and low interest rates were suppressing growth rates in bad loans, improving earnings on the wholesale side of banking and driving up book values.

The investment bank reiterated its overweight stance on Credit Suisse, raising its price target on the firm’s share price to SFr63.

“We believe Credit Suisse is further through the crisis and is seizing opportunities to pick up share in both investment banking and private banking,” Morgan Stanley said in a note. Besides Credit Suisse, Morgan Stanley’s “best ideas” list for European banks includes Nordea, the Scandanavian group, Saudi Hollandi Bank, Sabedell, Bankinter and Banesto.

"The performance of the private bank remains an important source of earnings strength and the continuing ability of CSG [Credit Suisse Group] to gather new money is encouraging, in our view," the note continued.

Morgan Stanley said Julius Baer was its “preferred pick” for the asset and wealth management category of financial firm.