NatWest Group PLC (LON:NWG) and Lloyds Banking Group PLC (LON:LLOY) are the UK banks most preferred by Citi, who said they remained ‘overweight’ on the sector as the UK continued its reopening from lockdown.
In a note on Wednesday, the investment bank said the bounce-back in the UK’s economy had been “sharper than expected” with gross domestic product (GDP) growth “well ahead of expectations”.
As a result, analysts said they expected further write-backs from the banks in their results for the second quarter, adding that the possibility of rising inflation may “force the [Bank of England] to hike [interest] rates earlier than first envisaged”, increasingly their money-making abilities.
Citi also said that the removal of bank dividend restrictions, announced by the Bank of England’s Prudential Regulation Authority on Tuesday, “implies a return to more normalised capital return payouts”.
In lunchtime trading, NatWest shares were up 1.2% at 203.9p, while Lloyds climbed 1% to 47.2p, HSBC rose 0.3% to 413.4p, Barclays increased 0.9% to 171.4p and Standard Charted inched up 0.3% to 449.8p.