Lloyds, HSBC both expected to hike guidance, both trading at a discount, says Deutsche analyst13 Jul 2023 19:55
Lloyds Banking Group PLC (LSE:LLOY) and HSBC Holdings PLC (LSE:HSBA) were both highlighted by analysts at Deutsche Bank as both lenders are expected to hike their full-year guidance at their upcoming half-year results.
Analysts Robert Noble predict Lloyds management will increase guidance for full-year net interest margin (NIM) and return on tangible equity (ROTE) when the FTSE 100-listed bank reports second-quarter results on 26 July.
Deutsche's estimates are 4% higher than the City consensus for pre-tax profit in the second quarter and 2% higher for the full year.
With Lloyds shares down 5% in the year to date and underperforming the wider Stoxx Europe 600 Banks index by 15%, with its shares trading for 5.7 times forecast 2024 earnings, a discount to the Stoxx average of 6.4 times, the analyst said the shares were a 'buy idea'.
The same was said for its blue-chip rival, which is scheduled to report on 1 August.
HSBC is forecast to increase 2023 net interest income and ROTE guidance with the results.
"Better NII is already reflected in consensus estimates but we still expect upgrades to come from higher non-interest income," the analyst wrote in a note to clients on Thursday.
His estimates on adjusted PBT are 3% higher than the general Square Mile consensus for the past quarter and 8% higher for the whole of 2023, due primarily to estimates for non-interest income.
Unlike Lloyds, shares in HSBC have risen 17% in the year to date and have outperformed the Stoxx idex by 8%.
But at 5.8 times 2024 earnings, HSBC's valuation is "still at a discount" to the wider index, Noble said, predicting "continuous buybacks" at HSBC to result in a higher yield of 12% in 2023 and 19% in 2024.
https://www.proactiveinvestors.co.uk/companies/news/1020674/lloyds-hsbc-both-expected-to-hike-guidance-both-trading-at-a-discount-says-deutsche-analyst-1020674.html
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