Lloyds Bank has come out on top of its Royal Bank of Canada (TSX:RY)’s rankings for the UK lender ahead of the upcoming annual results season in February.
Looking ahead, RBC points to several macro influences that will be key to how the shares perform over the rest of the year.
“Macro factors are often a significant driver of UK banks' share price performance," it says, and “ 2024 - with an inverted yield curve, central bank rate cuts and an election - is likely to be no different”.
RBC’s overriding message is even with these uncertainties UK banks “tend to do better than you expect!”
Among the large-cap banks, RBC’s order of preference is Lloyds, Barclays, Natwest and HSBC.
For the mid-caps, the ranking is One Savings first, followed by Paragon, Close Bros, Virgin Money and Metro.
RBC‘s comments were published on the day the heads of the big UK banks attended a summit with Chancellor Jeremy Hunt about how they can improve their stock market valuation.
Treasury ministers are worried that the relatively poor share price performance and low ratings are hampering the willingness and ability of the banks to lend and boost the economy.
Shares in Lloyds eased 0.4% to 43.2p while Barclays rose by 1% to 146.4p.