UBS analysts remain positive on UK bank stocks over their European counterparts, with a particular bias for Barclays PLC (LSE:BARC).
In a broker note published on Tuesday, UBS highlighted UK banks’ solid earnings season and an improved outlook, citing increasing net interest income driven by structural hedges.
UBS also noted that UK banks benefit from local regulation and shares are currently trading at a meaningful discount.
Barclays stands out as UBS's top domestic pick due to its attractive valuation and earnings potential, calling it “the cheapest UK bank on earnings”.
The firm also gave positive ratings to other UK banks, including Lloyds Banking Group (LBG) and NatWest, and mentioned StanChart as an attractive international play despite its high implied cost of equity.