Citi reiterates 'buy' rating on four UK bank stocks

Citi reiterated its ‘buy’ rating on Lloyds, NatWest, Barclays and Virgin Money on Friday.

It noted that the banks all provided 2023 net interest margin outlooks that disappointed versus consensus expectations, mainly due to an assumed increase in deposit betas on higher customer switching.

"Our Deep Dive analysis on deposit migration and pricing suggests NIM guidance for Lloyds & NatWest is overly conservative, whereas Barclays looks more ambitious," it said.

Citi said its 2023 adjusted pre-tax profit forecasts for NatWest are 17% above consensus, Lloyds 7% above, Virgin Money 4% above and Barclays 2% above.

Banking shares were sharply lower on Friday, having taken their cue from a sector selloff on Wall Street, which was triggered after tech-focused bank SVB Financial announced plans to raise more than $2bn in capital to help offset losses on bond sales.