Lloyds Banking Group PLC is the best value among the UK banks post Brexit and Royal Bank of Scotland PLC the worst, according to Societe Generale.
In an analysis of the sector post the referendum, the French bank says good credit quality with interest rates falling, real incomes rising and stable unemployment and house prices is an encouraging sign for the big banks.
The UK economy so far has also held up better than expected and while the recent cut in UK base rates has put margins are under some pressure an adjustment to pricing in higher risk products is underway.
Even in the event of a Brexit-induced recession, more prudent mortgage books and substantially higher capital ratios should mean the banks are in decent shape, says SocGen.
Lloyds (LON:LLOY) is the bank’s favourite and one of its top five banks picks in Europe. Buy is the rating with a 70p target price. Barclays (LON:BARC target 170p) and HSBC (LON:HSBA target 510p) are also buys.
Standard Chartered (LON:STAN) is a hold with 575p target but RBS (LON:RBS) is a sell with 200p the target.