Alexander Bueso Sharecast News

12 Oct, 2020 13:41

Citi sees contrarian 'opportunity' in UK banks

Barclays

258.00p

15:45 15/11/24

0.55%

1.40p

Analysts at Citi reiterated their 'buy' stance on several of the UK's largest lenders, citing the likely resumption of dividend payments from February 2021 onwards among some of the positives for the group.

Banks

4,677.17

15:45 15/11/24

1.24%

57.25

Financial Services

16,492.39

15:44 15/11/24

-0.24%

-40.16

FTSE 100

8,060.61

15:45 15/11/24

n/a

FTSE 250

20,508.75

15:45 15/11/24

n/a

FTSE 350

4,453.56

15:45 15/11/24

n/a

FTSE All-Share

4,411.85

15:45 15/11/24

n/a

FTSE Small Cap

6,802.32

15:45 15/11/24

n/a

HSBC Holdings

717.50p

15:45 15/11/24

1.60%

11.30p

Lloyds Banking Group

56.12p

15:45 15/11/24

1.96%

1.08p

Metro Bank Holdings

90.30p

15:40 15/11/24

0.33%

0.30p

NATWEST GROUP

392.00p

15:45 15/11/24

0.31%

1.20p

Paragon Banking Group

719.50p

15:40 15/11/24

1.12%

8.00p

Standard Chartered

944.80p

15:45 15/11/24

0.66%

6.20p

Virgin Money Holdings (UK)

349.30p

16:34 12/10/18

1.72%

5.90p

They labelled their view on the sector as 'contrarian', pointing out that investor interest in them was at an all-time low.

Similarly, large-capitalisation UK banks were now changing hands on price-to-book multiples of 0.3-0.5 times - which was lower than at the depths of the 2008 financial crisis.

Nevertheless, that, they said, presented an "opportunity, starting with third quarter 2020 results".

Consensus estimates for 2020 had now troughed, Citi added, credit loss assumptions already embedded "conservative" assumptions for unemployment and there was "limited incremental downside risk from a no-deal Brexit vs planned rudimentary [free trade area]".

Indeed, they anticipated that all of the large-cap banks were set to beat analysts' forecasts, especially so Barclays.

"We expect domestic banks to also beat on impairments, most notably Lloyds," they said.

Their 'buy' -rated names in the space included Lloyds, NatWest, StanChart, One Savings Bank and Virgin Money.

However, they were 'neutral' on Barclays, HSBC, Metro Bank and Paragon Banking Group.