HSBC adds Lloyds to 'Europe Super 10' list

HSBC added Lloyds to its ‘Europe Super 10’ list on Monday, as it removed Credit Agricole.

It said Lloyds, which it rates at ‘buy' with an 80p price target, has an attractive and progressive dividend yield helped by the exceptional returns generated by the group on risk assets.

As far as payment protection insurance is concerned, HSBC said the imposition of time bars means the timescale over which future PPI claims can emerge is no longer open ended, which could help the risk profile of the banks and improve statutory profitability.

“Our expectation for domestic rates to finally start rising in November of this year should also help to alleviate downward pressure on margins,” said HSBC.

It removed Credit Agricole from the list but retained its buy’ rating, saying it was lacking near-term catalysts and Lloyds offers a more attractive investment story.

HSBC said that since its inception in January 2010, the ‘Europe Super 10’ portfolio has returned 58.7% versus a return of 28.8% for MSCI Europe. Year-to-date, the portfolio has returned -4.4% versus a return of +0.9% for MSCI Europe.

At 1538 BST, Lloyds shares were down 0.7% to 67.55p while Credit Agricole shares were down 2.8% to €9.81.