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15 Nov Proactive investors Shares in most of the UK's big banks offer plenty of upside, according to broker Shore Capital, ranging from 7% at NatWest Group PLC (LSE:NWG) up to 47% for Standard Chartered PLC.
Following the sector's better than expected third-quarter results in recent weeks, which continued the recent trend of positive surprises on profits and capital, the broker upgraded its earnings forecasts on average by 14% for 2021, 4% for 2022 and 5% for 2023.
Virgin Money UK PLC (LSE:VMUK) was also upgraded to 'buy' from 'hold' following the recent pull-back in the shares.
ShoreCap's current order of preference, based on upside to its updated fair values, is Standard Chartered (462p price versus 680p as ShoreCap's fair value),
Barclays PLC (LSE:BARC) (195p to 285p), VMUK (171p to 230p),
HSBC PLC (LSE:HSBA) (434p to 545p),
Lloyds (49p to 59p)
NatWest in last (219p to 235p).
On average the upside to fair value across the sector is 30%.
Analyst Gary Greenwood said in a note to clients that the higher Bank of England base rates are set to drive margin expansion; that there are signs that the pressure on application spreads on new mortgage lending may be abating; that clients should ignore "noise" about the new IFRS 17 accounting standard as it will have no impact on lifetime profitability, cashflow or capital and hence valuation; and that his upgrades for this year reflected the further net provision releases during the period but trimmed those for 2023 to reflect increased risk associated with higher anticipated interest rates; costs esitmates have been lifted as banks reward employees with higher pay and bonuses, along with restructuring to adapt to changing customer behaviour.
As at 30 September 2021, the mainstream UK banks had surplus capital equivalent to circa 18% of their market cap when compared to management target ratios, which he said "means they are well positioned to fund growth and absorb regulatory headwinds while also ensuring sizeable distributions can be made to shareholders".
"We think a combination of a continued economic recovery and rising interest rates means that the holy grail of delivering sustainable double-digit RoTEs now looks more realistic than it has at any time since the financial crisis.
"We expect delivery to narrow the circa 30% discount to tangible net asset value that the sector is currently trading on."
Results are backward looking and much of it was priced in on the pre-result rise ....SP is now foreward looking ...and China/Asia looking a bit wobbly ...so the market is quite possibly re-risking a touch, for now ...
Were they terrible? They obviously didn't meet market expectations but the tone of pokerchips article seemed ok.
A messy day chartwise, leaving gaps to fill above and below. tut tut...
https://invst.ly/whl6r
Hopefully a temporary glitch.
https://www.cnbc.com/2021/11/02/stanchart-third-quarter-profit-doubles-as-bad-loans-shrink.html
It’s always one step forward, one kick to the kn***ers with this bank
The results aren't that bad at all.
What is crazy is that the share price is the same now as it was in June 2020. I'm back in.
The problem is Bill Winters is the wrong person to lead the bank. The bank is run only for the benefit of the employees and not the shareholders. Salary costs are far too high compared to other banks. Hopefully he will leave the bank soon and a more skilfull CEO will take over.
Any opinions on their planned foray into crypto?
It has been a take over target for 10 years. The Mkt valuation is 30% of the net assets on the BS. The chinese would not be allowed to buy it. The Americans see it as risky because of the HK and Chinese link. Barclays and HSBC are always an option but neither want it. Ther is a singapore bank who have been sniffing around, the largest shareholder of SC is also the shareholder of this Singapore bank. That is the most likely option. The best prospect for the bank is to ditch woke Bill Winters.
If all your comments are accurate,then it would appear to me that the Company is a takeover target.
This is now at near 6 month lows and for me is now in bargain territory . Great rise into the last couple of results and I see it no different this time . Covid threat , tapering off from the Fed , dollar , all playing there part just now but it will turn .
Thanks. But I'm not sure this explains the specific claim about sterling-denominated liabilities which I found so puzzling. The HL research references dollar-denominated borrowings which in global terms would make more sense than the borrowings in sterling about which I asked the question.
I was recently reading a book on the financial system which said Standard Chartered has long had a structural issue in trying to match its sterling liabilities against its foreign-currency assets. This struck me as odd because it suggests the bank, which doesn't take deposits in the UK, is denominating many or all of its accounts across the rest of the world in sterling, since it's the accounts which on the balance sheet are the main source of its liabilities. So is this claim correct and is this a long-term problem for Standard Chartered, exposing it to considerable translation risk depending on exchange rates? Anyone able to shed light?
As with Lloyds yesterday, STAN has posted very pleasing results, but I can't see any mention of a dividend or date info. Guess it will be the same ex div date as previous year if results date is very nearly the same.
Nice rise today. This really needs to be in the 700s.
They are in the bidding to buy part of citibank, asian division. The CEO is quite useless and cannot get any sort of return on the exisitng biusiness so an aquisition is fillling iinvestors with fear. Bill Winters needs to go. Wrong man for the job.
does anyone have a clue why this is dropping more than other uk banks today? cant see anything in the news
When they say good things about their competitors. It means Sell
Wed, 17th Mar 2021 12:13
(Sharecast News) - HSBC upgraded shares of Standard Chartered on Wednesday to 'buy' from 'hold' and lifted the price target to 550p from 430p as it said it was increasingly optimistic on future revenue growth.
It said margin stability and improving loan trends underpin its view. The company's new 7%+ return on tangible equity 2023 target looks achievable, HSBC said, with upside thereafter.
I'm doing the same with this and hsbc. And noticing a correlation. These shares seem to go up and down together.
Why are there so few posts on this stock. The volatility is suberb - feel the pain as it goes down and then a few days later - whoosh.
IMHO very tradeable share, with caution obviously.
Ex dividend on the 4th March
I've held these since last March and to be honest with You I'm pretty much back to square one. I did think about topping up when they hit £3.50ish but due to lack of funds available couldn't, that would have been a nice rise ! Long term hold for me.
I sold at 8am for 503p bought back at 477.9p additional shares with the same amount of money. I still believe this will do alot better in the long term. Willing to hold for a year or two. Even a possibility of a takeover at some point in the future.