Investors with exposure to United Kingdom Banks may want to pay attention to a new research report by analysts at Credit Suisse, which lists firm's top picks.
Overall, there is "too much pessimism" about domestic-focused U.K. banks, especially given a view of a "soft Brexit," coupled with low growth, low unemployment and moderate interest rate increases, Credit Suisse's Claire Kane commented in a research report.
The Upgrades And DowngradeLloyds' revised stock rating is based on expectations for the bank to become a "likely winner" from a Soft Brexit with a 25-percent potential return over the next year, the analyst highlighted. Also, RBS's revised rating is justified on positive developments on capital, especially from IFRS 9 accounting standard changes but at the same time the timing and size of a Department of Justice fine remains uncertain. Related Links: More Signs Brexit Fears Were Overplayed? UK Retail Sales Marked Fastest Pace Of Growth In 19 Months Bank Of England To British Banks: Prepare For The Worst
The following rating and price target changes were made on the London-listed banks and all price targets in British pounds:
- Barclays PLC (ADR) BCS maintained at Outperform with a price target lowered from 250 pounds to 230 pounds.
- HSBC Holdings plc (ADR) HSBC downgraded from Neutral to Underperform with a price target raised from 630 pounds to 650 pounds.
- Lloyds Banking Group PLC (ADR) LYG upgraded from Neutral to Outperform with a price target raised from 75 pounds to 80 pounds.
- Royal Bank of Scotland Group PLC RBS upgraded from Underperform to Neutral with a price target raised from 255 pounds to 275 pounds.
On the other hand, HSBC's stock has outperformed its domestic peers but earnings revisions have lagged its peers at the same time. Also, a more cautious outlook on NIM expansion and capital return adds to the bearish story.
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