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(Sharecast News) - Analysts at Credit Suisse reiterated their "positive" stance on UK banks ahead of the start of the earnings season for the sector.
To back up their arguments, they pointed to the improving economic and rate outlook and "cheap" valuations relative to history.
Linked to the former, their estimates for earnings in 2022-23 were ahead of consensus based on their view of the current yield curve for margins and recovered returns.
For the first quarter specifically, the "stand-out" area of performance was expected to be Capital Markets, with financial markets likely to see through weak revenues on the consumer side, such as from credit cards.
Credit Suisse also saw scope for "surprises" when it came to asset quality.
Furthermore, thus far in the year, the UK had seen the highest gross domestic product and unemployment upgrades.
Against that backdrop, their stated preference was for shares of UK domestic lenders over UK internationals - with their 'top pick' being Lloyds.
Lloyds was not exposed to Capital Markets but it stood to gain the most from the improved outlook.
The Swiss broker meanwhile was at 'neutral' for HSBC and 'underperform' on StanChart.
"Among the most meaningful risks to our calls are the path of the coronavirus and restrictions in the UK, and Scottish politics and a potential push for a second referendum, which we wrote about in our note Scottish elections and bank concentrations."
29 Nov 2023 11:13
IN BRIEF: Pets At Home starts GBP25 million 2nd half of share buyback
Pets At Home Group PLC - Cheshire, England-based pet supplies and veterinary services - Launches GBP25 million second tranche of GBP50 million share buyback. Commissions HSBC Bank PLC, part of HSBC Holdings PLC, to conduct the buyback tranche, which will end by March 28 next year. The overall programme was started in June. The launch of the second tranche follows the release of interim results on Tuesday. Pretax profit declined 35% to GBP34.7 million in the 28 weeks to October 12 from GBP53.4 million a year prior, as a 6.5% revenue increase was offset by higher cost of sales and administrative expenses. Pets at Home had maintained its interim dividend at 4.5 pence per share.
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