(Sharecast News) - Citi removed Lloyds Banking Group from its 'EMEA Focus List' on Friday as it pointed to headwinds in the second quarter.
"We have a buy rating on Lloyds Banking Group and on a 12-month view we see significant value in the stock," it said.
"We see re-rating potential in the long-term, trading on 0.85x P/TB for circa 14% consensus 2023 return on tangible equity (Citi estimates circa 17%).
"However, we note headwinds in the second quarter relating to deposit pricing changes, ongoing deposit mix-shift, absence of structural hedge maturities and ongoing mortgage margin compression - which has been more acute than peers - which could weigh on near-term earnings momentum."
Citi's revised top picks for EMEA banks for the second half of 2023 are BBVA, Intesa and NatWest, replacing Lloyds.
Lloyds (LLOY)
