Goldman Sachs has named HSBC as its preferred pick among UK banks on a long-term perspective, after analysing the financials across the sector since 1990.Analysts from the US firm said that UK banks under their coverage have booked £44.5bn of notable and non-recurring charges since 1990, equivalent to 12% of combined underlying pre-tax profit and an estimated annual return on equity (ROE) drag of over 100 basis points.As for HSBC, Goldman said that the bank has generated 51% of statutory sector profits and 42% of cash dividends since 1990 - "a disproportionate share". Meanwhile, 'one-offs' have actually provided a positive contribution of £2.5bn, compared with a negative impact elsewhere."Moreover, while HSBC, like its peers, has seen a recent rise in negative notables, these have remained moderate in scope both in absolute terms and relative to other banks. Notably, HSBC is the only UK bank under our coverage for which our ROE forecasts are not materially below targets."A 900p target price and 'conviction buy' rating was maintained for HSBC.As for the wider sector, Goldman said: "The persistency of 'non-recurring' items, and their magnitude of late, poses questions about how to appropriately value UK banks going forward, in our view."Meanwhile, a statutory sector ROE of under 8% since 1990 arguably raises question marks over the current ROE targets of UK banks, which without exception imply superior future returns relative to those reported since 1990 on a statutory basis."Goldman has cut its target price for Standard Chartered ('neutral') from 1,650p to 1,450p and raised its target for Lloyds ('neutral') from 77p to 80p. It has kept hold of its 370p target for RBS ('neutral') and its 300p target for Barclays ('neutral').BC
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