Asset managers' allocations to the sector remain well below those seen before the financial crisis - and just half as much among eurozone funds - even if a January fund manager survey saw the first, slight overweight for global banks in six years.
Having been widely spurned because of the scandal-hit sector's exposure to sub-prime assets, toxic government debt and regulation, bank stocks now account for an average 7.6 per cent of global equity funds, data from fund-tracker Thomson Reuters Lipper shows.
That's up nearly a point from crisis lows, largely thanks to the US housing recovery and an easing of the European debt crisis, but is still far short of 11 per cent in 2006.
For eurozone equity funds, the gap is even bigger. Banks accounted for 10.2 per cent of holdings in 2012, up from a recovery from a seven-year low of 9.5 per cent in 2011, but still well shy of the 2006 level of close to 20 per cent.
Sceptics say banks are still too hard to analyse, with regulatory and political risks and lack of transparency high on their list of concerns, together with worries over earnings and the risk of write-downs in Europe in particular.
"We haven't had the nerve globally to go for financials,"said Kevin Gardiner, head of investment strategy EMEA at Barclays Wealth, which has £176 billion (S$346 billion) under management. "We detect from our clients that there is still not the risk appetite that would countenance an overweight or buying more European banks."
A 49 per cent rally in European bank stocks in the last eight months has not been matched by earnings upgrades and banks are under pressure to show a better outlook when they report earnings over the next five weeks.
On Thursday, Deutsche Bank posted a 2.6-billion-euro (S$4.4 billion) quarterly loss after it took charges aimed at drawing a line under scandals and cleaning up its balance sheet without asking shareholders for cash.
On the same day, Spain's Santander said it had now taken the worst pain from the country's real estate crisis after its profit halved.
Highlighting the risks, the chairman of the Basel Committee of global bank regulators said last week that differences in the way banks define their risky assets were blinding investors' ability to make informed choices.
For a number of investors, that is a major concern.
"The big worry is the huge political and regulatory risk and the opacity of financial statements," said Jan Luthman, who co-manages £383 million at London-based Liontrust asset manager.
Wary investors may be missing out on valuations that are still well below pre-crisis level, even if they have started to rebound with the rally.
US banks' price-to-book ratio is at 1.1 while in the eurozone it stands at just 0.7, both down from 2 in 2007, according to Reuters Datastream calculation of MSCI indices. - Reuters